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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).

image text in transcribed 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: 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 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? 2. Refer to case 2 shown above. A study indicates that Alpha Division can avoid $3 per unit in shipping costs on any sales to Beta Division. a. What is Alpha Division's lowest acceptable transfer price? 3. In case 3 , what is the range of acceptable transfer prices? 4. In case 4 , what is the range of acceptable transfer prices

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