Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own divisions return on investment (ROI). Assume the following information relative to the two divisions:

	Case
		1			2			3			4
Alpha Division:
Capacity in units		54,000			304,000			107,000			209,000
Number of units now being sold to outside customers		54,000			304,000			83,000			209,000
Selling price per unit to outside customers	$	98		$	41		$	60		$	43
Variable costs per unit	$	61		$	19		$	34		$	27
Fixed costs per unit (based on capacity)	$	24		$	8		$	18		$	5
Beta Division:
Number of units needed annually		10,400			65,000			18,000			58,000
Purchase price now being paid to an outside supplier	$	91		$	38		$	60	*

* Before any purchase discount.

Managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated.

Required:

1. Refer to case 1 shown above. Alpha Division can avoid $4 per unit in commissions on any sales to Beta Division.

a. What is the minimum transfer price for Alpha Division?

b. What is the maximum transfer price for Beta Division?

c. Will the managers agree to a transfer?

A	Yes
B	No