Electronics is a manufacturer with two$$ departments: computer chips and cell phones. The computer chip that is produced in the Chips Department can be sold to customers at $ $6\mathrm{.}75$ per chip. The costs associated with the computer chips are as$$ follows:

View the computer chip costs.

Variable manufacturing costs. $..........$

$$2\mathrm{.}45$

Variable selling and administrative costs.

$$1\mathrm{.}10$

Capacity. $............................$

$700,000$

units

Current production. $...................$

$700,000$

units

The Cell Phone Department has been purchasing the chips that it needs for $$$$4\mathrm{.}50$ per chip from Chip Universe$,$ but the manager was thinking that if the Chips Department could supply the chips for less than what Chip Universe is$$ asking, then it would arrange a transfer between departments instead of giving the business to an external company.

If the Cell Phone Department needs $220,000$ computer chips and current production in the Chips Department is $440,000$chips$,$ should a transfer take$$ place? If$$ so$,$ at what$$ price? $($Note: For internal$$ transfers, the selling and administrative costs are reduced to $ $0\mathrm{.}55$ per$$ unit.$)$ What other qualitative factors might need to be$$ considered?

Question content area bottom

Part $1$

$$First$,$ let's determine if a transfer should take place by determining the minimum transfer price. $($Round your answer to the nearest$$ cent.$)$

What is the minimum transfer price?

Should the internal transfer take place?

Part $2$

$$Now$,$ find the range of the price for the internal transfer.

What is the lowest price for the internal transfer?

What is the highest price for the internal transfer?

Part $3$

What other qualitative factors might need to be$$ considered?