Alpha and Bets 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: Case 4 Alpha Division: Capacity in units 57,888 282,000 185,000 195,000 Number of units now being sold to outside customers 57,888 282,000 79,000 195,000 Selling price per unit to outside customers Variable costs per unit $ 183 $45 $64 $47 $ 64 $25 $ 41 $ 38 Fixed costs per unit (based on capacity) $29 $12 $21 $ 8 Beta Division: Number of units needed annually 10,500 70,000 23,000 64,000 Purchase price now being paid to an outside supplier $95 $44 $ 64 *Before any purchase discount. Required: 1. Refer to case 1 shown above. Alphs Division can avoid $5 per unit in commissions on any sales to Bets 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 Alphs Division can avoid $4 per unit in shipping costs on any sales to Bets 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 70,000 units to Bets Division for $43 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 Bets Division is now receiving an 4% 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 Bets Division offers to purchase 23,000 units from Alpha Division at $56.44 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 Bets 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 14 to 1C Req 24 to 20 Req 34 to 3D Req 4 1. Refer to case 1 shown above. Alpha Division can avoid $5 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? Identify the lowest and highest acceptable transfer prices: Lowest acceptable transfer price 98 Highest acceptable transfer price S 96 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: 5 Transfer price Will the managers agree to the trade? Yes No Show less Alpha and Bets 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: Case Alpha Division: Capacity in units 57,000 282,888 185,000 195,000 Number of units now being sold to outside customers 57,888 282,888 79,888 195,000 Selling price per unit to outside customer's $ 183 $ 45 $64 $47 Variable costs per unit $ 64 $25 $ 41 $ 38 Fixed costs per unit (based on capacity) $ 29 $12 $21 $8 Beta Division: Number of units needed annually 10,600 78,080 23,888 64,888 Purchase price now being paid to an outside supplier $ 95 $44 $ 64 *Before any purchase discount. Required: 1. Refer to case 1 shown above. Alphs Division can avoid $5 per unit in commissions on any sales to Bets Division. a. What is Alpha Division's lowest acceptable transfer price? b. What is Bets 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 $4 per unit in shipping costs on any sales to Bets 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 70,000 units to Bets Division for $43 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 Bets Division is now receiving an 4% 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 Bets Division offers to purchase 23,000 units from Alphs Division at $56.44 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 Bets 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. Req 1A to 1C Req 24 to 20 Req 34 to 3D Req 4 2. Refer to case 2 shown above. A study indicates that Alpha Division can avoid $4 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 (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 $43 per unit and that Beta Division refuses this price. What will be the loss in potential profits for the company as a whole? 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. Will the managers agree to the trade? Yes 5 ONO Loss in potential profits for the company Transfer price $ 41 $ 44 5 Show less Alpha and Bets 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: Case 1 2 4 Alpha Division: Capacity in units 57,000 282,000 185,000 195,000 Number of units now being sold to outside customers Selling price per unit to outside customer's Variable costs per unit 57,888 282,880 79,000 195,888 $ 183 $ 45 $ 64 $64 $25 $ 41 $47 $ 38 Fixed costs per unit (based on capacity) $ 29 $12 $21 $ 8 Beta Division: Number of units needed annually 10,500 78,000 23,000 64,000 Purchase price now being paid to an outside supplier $ 95 $44 $ 64 *Before any purchase discount. Required: 1. Refer to case 1 shown above. Alphs Division can avoid $5 per unit in commissions on any sales to Bets 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 Alphs Division can avoid $4 per unit in shipping costs on any sales to Bets 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 70,000 units to Bets Division for $43 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 Bets Division is now receiving an 4% 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 Bets Division offers to purchase 23,000 units from Alphs Division at $56.44 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 Bets 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 Req 24 to 20 Req 34 to 3D Req 4 3. Refer to case 3 shown above. Assume that Beta Division is now receiving an 4% price discount from the outside supplies. 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 23,000 units from Alpha Division at $56.44 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.) 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: 5 Will the managers agree to the trade? Yes ONO Division A's ROI should Increase Decrease Transfer price 5 Show less Alpha and Bets 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: Case Alpha Division: Capacity in units 57,000 282,000 185,000 195,000 Number of units now being sold to outside customers 57,888 282,000 79,000 195,888 Selling price per unit to outside customer's $ 183 $45 $64 Variable costs per unit $ 64 $25 $ 41 $47 $ 38 Fixed I costs per unit (based on capacity) $ 29 $12 $ 21 $8 Beta Division: Number of units needed annually 10,500 78,000 21,000 64,000 Purchase price now being paid to an outside supplier $ 95 $44 $ 64 *Before any purchase discount. Required: 1. Refer to case 1 shown above. Alphs Division can avoid $5 per unit in commissions on any sales to Bets 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 Alphs Division can avoid $4 per unit in shipping costs on any sales to Bets Division. a. What is Alpha Division's lowest acceptable transfer price? b. What is Bets 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 70,000 units to Bets Division for $43 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 Bets Division is now receiving an 4% price discount from the outside supplier. a. What is Alpha Division's lowest acceptable transfer price? b. What is Bets 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 Bets Division offers to purchase 23,000 units from Alpha Division at $56.44 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 Bets 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 14 to 1C Req 24 to 20 Req 34 to 3D Req 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? Lowest acceptable transfer price Show less