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:

$*$Before any purchase discount.

Required:

Refer to case $1$ shown above. Alpha Division can avoid $$2$ 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?

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?

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 $40,000$ units to Beta Division for $$108$ per unit and that Beta Division refuses this price. What

will be the loss in potential profits for the company as a whole?

Refer to case $3$ shown above. Assume that Beta Division is now receiving an $8\%$ 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 $30,000$ units from Alpha Division at $$110$ per unit. If Alpha Division accepts this price, would

you expect its ROI to increase, decrease, or remain unchanged?

Refer to case $4$ shown above. Assume that Beta Division wants Alpha Division to provide it with $122,000$ units of a different product

from the one Alpha Division is producing now. The new product would require $$41$ per unit in variable costs and would require that

Alpha Division cut back production of its present product by $45,750$ units annually. What is Alpha Division's lowest acceptable transfer

price?