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Norelco Company's Electrical Division produces a high - quality transformer. Sales and cost data on the transformer follow: Selling price per unit on the outside
Norelco Company's Electrical Division produces a highquality transformer. Sales and cost data on the transformer follow: Selling price per unit on the outside market Variable costs per unit Fixed costs per unit based on capacity Capacity in units $ $ Z Norelco Company has a Motor Division that would like to begin purchasing this transformer from the Electrical Division. The Motor Division is currently purchasing transformers each year from another company at a cost of $ per transformer. Necro Company evaluates its division managers on the basis of divisional profits. Required: Assume that the Electrical Division is now selling only transformers each year to outside customers. a From the standpoint of the Electrical Division, what is the lowest acceptable transfer price for transformers sold to the Motor Division? Transfer price b From the standpoint of the Motor Division, what is the highest acceptable transfer price for transformers acquired from the Electrical Division? Transfer price Updates Available Do you want to restart to inst updates now or try tonight? Help Savet Exit c If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of transformers from the Electrical Division to the Motor Division? Yes O No d From the standpoint of the entire company, should a transfer take place? es Transfer should not take place. Transfer should take place. Updates Available Do you want to restart to ins updates now or try tonight? Help Save & Exit Assume that the Electrical Division is now selling all of the transformers it can produce to outside customers. a From the standpoint of the Electrical Division, what is the lowest acceptable transfer price for transformers sold to the Motor Division? Transfer price b From the standpoint of the Motor Division, what is the highest acceptable transfer price for transformers acquired from the Electrical Division? Transfar pricec If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of transformers from the Electrical Division to the Motor Division? Yes Nod. From the standpoint of the entire company, should a transfer take place? Transfer should not take place. Transfer should take place.
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