Each distribution group was divided into several divisions and each division operated as if it were an independent company. The division issued invoices and received payments from their clients. At the beginning of the year, each division negotiated with headquarters to establish monthly sales and gross profit quotas. Each division's staff remuneration was calculated as a combination of a base salary and a bonus based on meeting these revenue and gross profit numbers. Furthermore, a year-end bonus was given as a percentage of the gross profit that exceeded the quota if the division's performance was beyond both sales and gross profit quotas. Stone had a long-term co-operation contract with manufacturers. At the beginning of each year, Stone signed a purchasing agreement specifying the purchase date and quantity of each model. For HP34401A, the purchase agreement in 2001 specified the following: Ordering Date Quantity Purchase Price Recommended Retail Price January 1, 2001 100 RMB8,900 RMB11,500 May 1, 2001 120 RMB8,900 RMB11,500 September 1, 2001 200 RMB8,900 RMB11,500 Typically, Stone would receive the goods at the end of the ordering month. Orders for the month of September tended to be the largest each year, due to the fact that customers completed their own investment budgets in the fourth quarter. Selling price was five per cent higher at that time and the distributors often ran out of stock in December. There were also two other HP distributors in Beijing: Oriental Integration and Zhongchu. Their purchasing and retail prices were similar to Stone's. Zhongchu was the largest HP distributor with a 30 per cent market share. Oriental Integration was the smallest having a 15 per cent market share. HP's instrument distributors tended to earn a low margin, with end users usually receiving a 10 per cent discount on the recommended retail price and wholesalers usually receiving a 15 per cent discount on the recommended retail price. As competition grew more intense, a customer usually asked different distributors or wholesalers for their lowest price, and made the purchase based on the best price given. For digital multimeters, there were two basic categories: low end and high end. Low end referred to handheld, usually with a display of 3 digits or 4 digits. High end referred to desktop, with a display of more digits and higher accuracy. HP34401A is a 6 digit multimeter. Its competition was 7802, manufactured by Wavetek, another U.S. company. 7802, distributed by Lanbo Co. Ltd. in China, was viewed by some as the most accurate 6 digit multimeter. It enjoyed high reputation and usually cost 20 per cent more than HP34401A.

In a typical case, a Stone customer could issue only one check for each order. To facilitate this, the customer needed to purchase all its desired goods from only one division of Stone. According to the Stone accounting principles, if a customer wanted to buy products from different divisions in the company, the division that obtained the most sales would issue the invoice and receive payment from the customer. This division would then buy the necessary goods from the other Stone division, or from other distributors outside of Stone to meet the client's needs. Yan had to decide upon the appropriate transfer price to use. He knew that his division's product was the smaller portion of the order. Therefore, his division would not be able to issue the invoice. As a result, his division would receive gross profit from the sale, but would lose the sales revenue. On the other hand, the Industrial Controllers Division would receive both the sales revenue and the gross profit, if any

How much gross profit per unit would the Industrial Controllers Division earn if they purchase the HP34401A model from an outside distributor to resell to their customer?