Case Alpha Division: Capacity in units 51,000 294,000 107,000 192,000 Number of units now being sold to outside customers 51,000 294,000 82,000 192,000 Selling price per unit to outside customers 99 $ 40 $ 69 $ Variable costs per unit Fixed costs per $ 60 $ 19 $ 45 $ 32 unit (based orn capacity) $ 24 $ 27 $ Beta Division: Number of units needed annually Purchase price now 9,900 66,000 18,000 60,000 being paid to an outside supplier $ 90 $ 69* 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 $5 per unit in commissions on any sales to Beta Division. a. What is the lowest acceptable transfer price from the perspective of the Alpha Division? b. What is the highest acceptable transfer price from the perspective of the Beta Division? 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 Beta Division. a. What is the lowest acceptable transfer price from the perspective of the Alpha Division? b. What is the highest acceptable transfer price from the perspective of the Beta Division? 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 66,000 units to Beta Division for $38 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 Beta Division is now receiving an 3% price discount from the outside supplier a. What is the lowest acceptable transfer price from the perspective of the Alpha Division? b. What is the highest acceptable transfer price from the perspective of the Beta Division? 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 18,000 units from Alpha Division at $61.93 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 Beta Division wants Alpha Division to provide it with 60,000 units of a different product from the one Alpha Division is producing now. The new product would require $28 per unit in variable costs and would require that Alpha Division cut back production of its present product by 30,000 units annually. What is the lowest acceptable transfer price from Alpha Division's perspective? Req 1A to Req 2A to Req 3A to 1C 2D 3D 1. Refer to case 1 shown above. Alpha Division can avoid $5 per unit in commissions on any sales to Beta Division. a. What is the lowest acceptable transfer price from the perspective of the Alpha Division? b. What is the highest acceptable transfer price from the perspective of the Beta Division? c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer? Show lessA ldentify the lowest and highest acceptable transfer ices Lowest acceptable transferf$ rice 2,145 Highest acceptable transfer rice ldentify the range of acceptable transfer prices (if any) OThere is not a range of acceptable transfer prices There is a range of acceptable transfer prices as shown below: Transfer rice Will the managers agree to the trade? OYes ONO Req 1A to 1C Req 2A to 2D Req 1A to Req 2A to Req 3A to 1C 2D 3D 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 the lowest acceptable transfer price from the perspective of the Alpha Division? b. What is the highest acceptable transfer price from the perspective of the Beta Division? 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 66,000 units to Beta Division for $38 per unit and that Beta Division refuses this price. What will be the loss in potential profits for the company as a whole? Show lessA ldentify the lowest and highest acceptable transfer prices Lowest acceptable transfer rice Highest acceptable transfer rice ldentify the range of acceptable transfer prices (if any) OThere is not a range of acceptable transfer prices There is a range of acceptable transfer prices as shown below Transfer ice Will the managers agree to the trade? OYes ONO Loss in potential profits for the compan Req 1A to Req 2A to Req 3A to 1C 2D 3D 3. Refer to case 3 shown above. Assume that Beta Division is now receiving an 390 price discount from the outside supplier. a. What is the lowest acceptable transfer price from the perspective of the Alpha Division? b. What is the highest acceptable transfer price from the perspective of the Beta Division? 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 18,000 units from Alpha Division at $61.93 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.) Show lessA ldentify the lowest and highest acceptable transfer prices Lowest acceptable transfer price Highest acceptable transfer price ldentify the range of acceptable transfer prices (if any) OThere is not a range of acceptable transfer prices There is a range of acceptable transfer prices as shown below Transfer rice Will the managers agree to the trade? OYes ONo Division A's ROl should OIncrease ODecrease Complete this question by entering your answers in the tabs below. Req 1A to Req 2A to Req 3A to 1C 2D 3D Refer to case 4 shown above. Assume that Beta Division wants Alpha Division to provide it with 60,000 units of a different product from the one Alpha Division is producing now. The new product would require $28 per unit in variable costs and would require that Alpha Division cut back production of its present product by 30,000 units annually. What is the lowest acceptable transfer price from Alpha Division's perspective? Show lessA Lowest acceptable transfer price