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please help Company A has several divisions including a Capacitor Division that sells capacitors to both internal and external customers. The company's X-ray Division uses
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Company A has several divisions including a Capacitor Division that sells capacitors to both internal and external customers. The company's X-ray Division uses capacitors as a component in its final product and is evaluating whether to purchase them from the Capacitor Division or from an external supplier. The market price for capacitors is $100 per 100 capacitors. Steven Williams is the controller of the X-ray Division, and Phillip Snyder is the controller of the Capacitor Division. The following conversation took place between Steven and Phillip: Steven: I hear you are having problems selling capacitors out of your division. Maybe I can help. Phillip: Yove got that right. We're producing and selling at about 90% of our capacity to outsiders. Last year, we were selling 100% of capacity. Would it be possible for your division to pick up some of our excess capacity? After all, we are part of the same company. Steven: What kind of price could you give me? Phillip: Well, you know as well as I that we are under strict profit responsibility in our divisions, so I would expect to get market price, $100 for 100 capacitors. Steven: im not so sure we can swing that. I was expecting a price break from a "sister" division. Phillip: Hey, I can only take this "sister" stuff so far. If I give you a price break, our profits will fall from last year's levels. I dorrt think I could explain that. Im sorry, but I must remain firm-market price. After all, it's only fair-that's what you would have to pay from an external supplier. Steven: Fair or not, I think weill pass. Sorry we couldn't have helped. Phillip: Hey, I can only take this "sister" stuff so far. If I give you a price break, our profits will fall from last year's levels. I don't think I could explain that. Im sorry, but I must remain firm - market price. After all, it's only fair - that's what you would have to pay from an external supplier. Steven: Fair or not, I think we'll pass. Sorry we couldn't have helped. Instructions: Answer the question below using 150 words or more. After this, make sure to reply to one of your peer's responses using 100 words or more. Is Steven behaving unethically by trying to force the Capacitor Division into a price break? Comment on Phillip's reactions Step by Step Solution
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