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Phoenix Inc , a cellular communication company, has multiple business units, organized as divisions. Each division's management is compensated based on the diviSIon's operating income. DIVIsion A currently purchases cellular equipment from outside markets and uses it to produce communication systems. Division B produces similar cellular equipment that it sells to outSIde customersbut not to division A at this time. Division A's manager approaches diVIsion B's manager with a proposal to buy the equipment from div on B If it produces the cellular equipment that division A desires, division B will incur variable manufacturing costs of $60 per unit. Relevant Information about Division B Sells 87.500 units of equipment to outside customers at $130 per unit Operating capacity is currently 80%; the di n can operate at 100% Variable manufacturing costs are $70 per unit Variable marketing costs are $8 per unit Fixed manufacturing costs are $880,000 Income per Unit for Division A (assuming parts purchased externally. not internally from division B] Sales revenue 1; 329 Manufacturing costs: Cellular equipment sa Other materials la Fixed (osts 40 total manu-Ktur'ing costs 139 Grass margin 199 Marketing costs: Variable 35 Fixed 15 total marketing costs 59 Operating income per unit 5 149 , Required: 1 DiVIsion A wants to buy 43,750 units from Division B at $75 per unit Should Division B accept or reject the proposal to sell the 43,750 units? [a] Calculate the net operating profit or loss to Div on B and to the firm as a whole ifthe 43,750 unis are sold to DIVIsion A. (0.) Calculate the net benefit to the rm as a whole if Division A will accept a partial shipment from DIVIsion B. 2. What is the range oftransfer prices over which the divisional managers might negotiate a final transfer price? 6 Answer is not complete. Complete this question by entering your answers in the tabs below. Reql ReqlA ' ReqlB H Rqu ' Division A wants to buy 43,750 units from Division B at $75 per unit. Calculate the net operating prot or loss to D and to the rm as a whole if the 43,750 units are sold to Div on A. Division A requires all 43.750 units Net operating protlloss to Division B Total Contribution $ 600,000 9 Forgone contribution of not selling to outside consumers 942,500 a 9 $ (342,500) Net operating loss to division B Net operating prollloss to the rm as a whole. Savings to the rm ll DIVlSan A buys all 43,750 units Phoenix Inc , a cellular communication company, has multiple business units, organized as divisions, Each division's management is compensated based on the division's operating income, Division A currently purchases cellular equipment from outside markets and uses it to produce communication systems Division B produces similar cellular equipment that it sells to outside customersibut not to division A at this time, Division A's manager approaches diVIsion B's manager with a proposal to buy the equipment from division B If it produces the cellular equipment that division A desires, diVIsion B will incur variable manufacturing costs of $60 per unit. Relevant Information about Division B Sells 87,500 units of equipment to outside customers at $130 per unit Operating capacity is currently 80%; the di n can operate at 100% Variable manufacturing costs are $70 per unit Variable marketing costs are $8 per uriit Fixed manufacturing costs are $880,000 Income per Unit for Division A (assuming parts purchased externally, not internally from division B] Sales revenue 5 329 Manufacturing costs: Cellular- equipnient 86 Other materials la Fixed costs 43 Total mamnracturing costs 139 Grass margin 199 Marketing (nits: Variable 35 Fixed 15 total marketing costs 50 Operating in(oliie per unit $ 1A8 i Required: 1 DiVIsion A wants to buy 43.750 units from Division B at $75 per unit Should Division B accept or reject the proposal to sell the 43,750 units? [a] Calculate the net operating profit or loss to Div n B and to the firm as a whole lithe 43,750 units are sold to Division A, ([1) Calculate the net benefit to the rm as a whole if Division A will accept a partial shipment from Division B, 2, What is the range oftransier prices over which the divisional managers might negotiate a final transfer price? 9 Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 Req 1A Req IE I Req Z ' ' ri A wants to buy 43,750 units from D ri A will accept a partial shipment from in B at $75 per unit. Calculate the net benet to the rm as a whole if sion B. Total capacity of division B 125,000 9 Maximum sales possible to outside consumers 100'000 o Remaining Capacity 25,000 9 Savings per unit $ 15 a Total benet from this alternative $ 375,000 9