H 11 Concept Overviews, Exe... i Saved Help Save & Exit Submit Check my work 5 Exercise 11-3 (Algo) Transfer Pricing Basics (LO11-3] S8 ok ht Sako Company's Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow: Selling price per unit on the intermediate market $ 92 Variable costs per unit $ 74 Fixed costs per unit (based on capacity) Capacity in units 25,000 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 per year. It has received a quote of $89 per speaker 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 (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 place? ht encos 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 (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? From the standnoint of the entire comnany should the transfer take place? Check my work Division will need 5,000 speakers per year. It has received a quote of $89 per speaker 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 (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 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 (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 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 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, 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. you expect the GIVISION managers to voluntariy agree to the transfer or D, UUU speakers trom ine AUDIO VIVISION to ne mir d. From the standpoint of the entire 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 Hi-Fi Divis b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the AL Division? c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interfer you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the HI-FE d. From the standpoint of the entire company, should the transfer take place? Complete this question by entering your answers in the tabs below. Reg 1A and 1B Req 1C Reg 10 Reg 2A and 28 Reg 20 Reg 2D Req 3A and 3B Reg 3C Reg 3D 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? Show less a. Lowest acceptable transfer price b. Highest acceptable transfer price 89 11 Concept Overviews, Exercises, Problems i Seved 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 DI b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Division? c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interfe you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the HI- d. From the standpoint of the entire company, should the transfer take place? Complete this question by entering your answers in the tabs below. Reg 1A and 1B Reg 1C Req 1D Reg 2A and 2B Req 2c Reg 2D Reg 3A and 38 Reg 3C Reg 3D 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. 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: Transfer price 89 Are the managers likely to agree on a transfer price? Yes ONO a S s $