Kemper corporation manufactures and retails watches. The manufacturing has three departments: Component, Movement, Toorn. The general managers of the departments have the authority to decided whether are not to sell outside of the company or within. The Transfer prices are determined by the managers of each department. There is external demand for each department's products and there is an external supply to purchase from. Demand for the products each department produces is such that whether the sales are make internally or externally the market and transfer prices are not impacted. The manager of the Movement department is deciding between two orders. 1. The Toorn department needs 3,000 units from the Movement department. To manufacture the units, Movement needs to purchase parts from the Component department priced at $600 per unit. The Component department's variable cost for the parts is $300 per unit. It will cost the Movement department $500 per unit for further processing before shipping to Toorn The manager knows that if Toorn cannot buy the parts internally from Movement they will purchase the parts from the Vander Corporation for a price of $1,500 per unit. Vander would need to purchase 3,000 parts from Components for $400 each. The variable cost of these parts is $200 each. 2. The Aloe Company wants to place an order with the Movement department for 3,500 units at a price of $1,250 per unit. Movement would have to purchase components from the Component department for $500 per unit. The Components variable cost for these units are $250 each. $400 per unit of work would have to be done by the Movement department to get them ready to sell to Aloe Company. The Movement department's plant capacity is limited and the department can either accep the Aloe contract or the Toorn department order, but not both. Capacity can not be increased in the short-term.