Exercise 11-3 (Algo) Transfer Pricing Basics [LO11-3] Sako Compony's Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker foliow: Sako Company has a HI.Fi Division that could use this speaker in one of its products. The Hi.Fi Division will need 5,000 speakers pet yean it has recelved a quote of $81 per speoker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits. Required: 1. Assume the Audio Division sells only 20,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-fi Division? b. From the standpoint of the Hi-Fi Division. what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (d any) between the two divisions? If left free to negotiote without interference, would you expect the division managers to valuntarily agree to the transfer of 5,000 speakers from the Audio Division to the HI-FI Division? d. From the standpoint of the entire company, should the transfer take place? 2. Assume the Audio Division is selling 22,500 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi. Fi Division? b. From the standpoint of the HI-FI Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (f any) between the two divisions? If left free to negotate without interference, would you expect the dlvision monagers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the HI-Fi Division? d. From the standpoint of the entre company, should the transfer take place? 3. Assume the Audio Division is selling 25.000 speakers per year to outside customers, a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hu-fi Division? b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (f any) between the two divisions? If lef free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi.Fi Division? d. From the standpoint of the entire company, should the transfer take place? a. From the standpoint of the Audio Dlilsion, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? b. From the standpoint of the Hi-FI Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, wou you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? d. From the standpoint of the entire company, should the transfer take place? Complete this question by entering your answers in the tabs below. Assume the Audio Division sells only 20,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? b. From the standpoint of the Hi-fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (f any) between the two divisions? If left free to negotiate without interference, woul you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? d. From the standpoint of the entire company, should the transfer take place? Complete this question by entering your answers in the tabs below. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? Assume the Audio Division is now seiling only 20,000 speakers per year to outside customers. 3. Assume the Audio Division is selling 25,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? b. From the standpoint of the HI-FI Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (ff any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the HI-FI Division? d. From the standpoint of the entire company, should the transfer take place? Complete this question by entering your answers in the tabs below. From the standpoint of the entire company, should the transfer take place? Assume the Audio Division is now selling only 20,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the HI-Fi Division? b. From the standpoint of the HI-FI Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, woul you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the HI-FI Division? d. From the standpoint of the entire company, should the transfer take place? Complete this question by entering your answers in the tabs below. Assume the Audio Division is selling 22,500 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? b. From the standpoint of the HI-FI Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? 3. Assume the Audio Division is selling 25,000 speakers per your to outuide customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfor price for speakers soid to the Hi.FI Division? b. From the standpoint of the Hi.fi Division, what is the highest acceptable transfor pice for speakers acquired from the Audlo Division? c. What is the range of acceptable transfer prices (if any) between the two divisions? if left free to negotiate without interference, would you expect the division managers to voluntarly agree to the transfer of 5,000 speakers from the Audio Division to the H1-Fi Division? d. From the standpoint of the entire company, should the transfer toke place? Complete this question by entering your answers in the tabs below. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? Assume the Audio Division is selling 22,500 speakers per year to outside customers. Dlvision? c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, w you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Divisio d. From the standpoint of the entire company, should the transfer take place? Complete this question by entering your answers In the tabs below. From the standpoint of the entire company, should the transfer take place? Assume the Audio Division is selling 22,500 speakers per year to outside customers. Complete this question by entering your answers in the tabs below. Assume the Audio Division is selling 25,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? b. From the standpoint of the Hi-FI Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? 3. Assume the Audio Division is selling 25,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the HiFi Division? b. From the standpoint of the HI-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptabie transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? d. From the standpoint of the entire company, should the transfer take ploce? Complete this question by entering your answers in the tabs below. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarity agree to the transfer of 5,000 speakers from the Audio Division to the Hi-FI Division? 3. Assume the Audio Division is selling 25,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptabie transfer price for speakers sold to the Hi.fi Division? b. From the standpoint of the HIFI Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (f any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the HI-Fi Division? d. From the standpoint of the entire company, should the transfer take place? Complete this question by entering your answers in the tabs below. From the standpoint of the entire company, should the transfer take place? Assume the Audio Division is selling 25,000 speakers per year to outside customers