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 (ROA). Assume the following information relative to the two divisions: "Before any purchase discount. Required: 1. Refer to case 1 shown above. Alpha Division can ayoid $2 per unit in commissions on any sales to Beta Division 3. What is Alpha Division's lowest acceptable transter price? b. What is Beta Division's highest acceptable transfer price? c. What is the conge of acceptable tsansfer prices (if any) between the two divisions? Wit the manogers probably ogree to a transter? 2. Refer to case 2 shown above A study indicates that Aipha Division can avoid S5 per unit in shipping costs on ary sates to Beta Division 6. What is Aleha Division's lowest acceptable transtec price? b. What is Beta Divesion's highest acceptable transfec pice? C. What is the cange of acceptoble tionster prices if afyl between the wwo divsions? Would you expect any disagreement between the two civisionalmanegers over what the exoct vanster price should be? a. Aspume Alpha Division otters to sel 40000 units to Beto Division for s108 per unit and that Beta Divsion tefuses this price. What Will be the loss in potemtial protits for the company as a whole? 3. Refer to cose 3 shown above. Assume that Beta Q vosion is nowreceming an 8% price discount from the outside suppliet. 3. Whst is apha Divions owest acceptoble torisfer price? 6. What is Beth Divisions higtest occeptoble transtec pice? c. What ot the rande of akceptabie tronster phces if aryif between whe two dysions? wi the managels probably oarec to a transter? d. Assume Beta Division ofets to purchise 30,000 umits feom Apha pivis on hr silo pen hit if Alpho Disison accepts this orice. would you expect is sol to increase icecresse or remain whinhanged? pribe? Complete this question by entering your answers in the tabs below. 1. Refer to case 1 shown above. Alpha Division can avoid $2 per unit in commissions an 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? Complete this question by antering your answers in the tabs below. 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? 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? Complate this question by entering your answers in the tabs below. 3. 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 $60 per unit. If Alpha Division accepts this price, would you expect its ROI to increase, decrease, or remain unchanged? Complete this question by entering your answers in the tabs below. 4. 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 541 per unit in variable costs and would require that Apha Division cut back production of its present product by 45,750 units annually. What is Alpha Division's lowest acceptable transfer price
