Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own division's return on investment (ROI) Assume the following information relative to the two divisions 10 points 198,000 190.000 BOOK Alpha Division Capacity in units Number of units now being sold to outside customers Selling price per unit to outside customers Variable costs per unit Yixed costs per unit based on capacity) sera Division Humber of units needed annually Purchase price now being paid to an outside supplier "Before any purchase discount 51,000 304,000 107.000 51.000 304,000 $1,000 5 99 $ 41 67 5 635 215 5 26 11 24 10,000 70.000 20.000 45 29 Prima 7 64,000 925 40 67. References Required: 1. Refer to case shown above Alpha Division can avoid 54 per unit in commissions on any sales to Beta Division 3. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices of any) between the two divisions? Will the managers probably agree to a transfer? 2. Refer to case 2 shown above. A study indicates that Alpha Division can avoid $5 per unit in shipping costs on any sales to Beta Division a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? What is the range of acceptable transfer prices of any between the two divisions? Would ybu expect any disagreement between the two divisional managers over what the exact transfer price should be? d. Assume Alpha Division offers to sell 70,000 units to Beta Division for $39 per unit and that Beta Division refuses this price. What will be the loss in potential profits for the company as a whole? Check View previous attempt L. WHOLIS URUYE U OLLE POUR UNE PILE , WWWU LIVSTID MUU yuu CAPILE Guy Wewe ure two divisional managers over what the exact transfer price should be? d. Assume Alpha Division offers to sell 70.000 units to Beta Division for $39 per unit and that Beta Division refuses this price. What will be the loss in potential profits for the company as a whole? 3. Refer to case 3 shown above. Assume that Beta Division is now receiving an 5% price discount from the outside supplier a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer? d. Assume Beta Division offers to purchase 20,000 units from Alpha Division at $58.65 per unit. If Alpha Division accepts this price, would you expect its ROI to increase, decrease, or remain unchanged? 4. Refer to case 4 shown above. Assume that Beta Division wants Alpha Division to provide it with 64,000 units of a different product from the one Alpha Division is producing now. The new product would require $26 per unit in variable costs and would require that Alpha Division cut back production of its present product by 32,000 units annually. What is Alpha Division's lowest acceptable transfer price? Complete this question by entering your answers in the tabs below. Req1A to 1C Reg 2 to 20 Reg JA to 3D Reg4 1. Refer to case 1 shown above. Alpha Division can avoid 54 per unit in commissions on any sales to Beta Division a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer Show less Identify the lowest and highest acceptable transfer prices Lowest acceptable transfer price Highest acceptable transfer price Vle Reg 1A to 1C Reg 2A to 2D Req 3A to 3D Reg 4 2. Refer to case 2 shown above. A study indicates that Alpha Division can avoid $5 per unit in shipping costs on any sales to Beta Division a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Diviston's highest acceptable transfer price? c. What is the range of acceptable transfer prices (if any) between the two divisions? Would you expect any disagreement between the two divisional managers over what the exact transfer price should be? d. Assume Alpha Division offers to sell 70,000 units to Beta Division for $39 per unit and that Beta Division refuses this price. What will be the loss in potential profits for the company as a whole? Show less Identify the lowest and highest acceptable transfer prices Lowest acceptable transfer price Highest acceptable transfer price Identify the range of acceptable transfer prices (if any) There is not a range of acceptable transfer prices There is a range of acceptable transfer prices as shown below: s Transfer price s Will the managers agree to the trade? Yes O No Loss in potential profits for the company 3. Refer to case 3 shown above. Assume that Beta Division is now receiving an 5% price discount from the outside supplier. a. What is Alpha Division's lowest cceptable transfer price? 6. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer? d. Assume Beta Division offers to purchase 20,000 units from Alpha Division at $58.65 per unit. If Alpha Division accepts this price, would you expect its ROI to increase, decrease, or remain unchanged? (Round your final answers to 2 decimal places.) Show less Identify the lowest and highest acceptable transfer prices Lowest acceptable transfer price Highest acceptable transfer price Identify the range of acceptable transfer prices (if any): There is not a range of acceptable transfer prices There is a range of acceptable transfer prices as shown below: Transfer price s Will the managers agree to the trade? Yos ONO Division A's ROI should Increase Decrease U. VHOLI DELD UIVISION restollepavi u CHS price c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer? d. Assume Beta Division offers to purchase 20,000 units from Alpha Division at $58.65 per unit. If Alpha Division accepts this price, would you expect its ROI to increase, decrease, or remain unchanged? 4. Refer to case 4 shown above. Assume that Beta Division wants Alpha Division to provide it with 64,000 units of a different product from the one Alpha Division is producing now. The new product would require $26 per unit in variable costs and would require that Alpha Division cut back production of its present product by 32,000 units annually. What is Alpha Division's lowest acceptable transfer price? Complete this question by entering your answers in the tabs below. Reg 1A to 1C Reg 2A to ZD Req 3A to 30 Reg 4 Refer to case 4 shown above. Assume that Beta Division wants Alpha Division to provide it with 64,000 units of a different product from the one Alpha Division is producing now. The new product would require $26 per unit in variable costs and would require that Alpha Division cut back production of its present product by 32,000 units annually. What is Alpha Division's lowest acceptable transfer price? Show less Lowest acceptable transfer price