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Q-5: Smart Enterprises has different division in its company. Its electrical Division produces a high-quality transformer. Sales and cost data on the transformer follow: Selling

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Q-5: Smart Enterprises has different division in its company. Its electrical Division produces a high-quality transformer. Sales and cost data on the transformer follow: Selling price per unit on the outside market $20 Variable costs per unit $10.50 Fixed costs per unit (based on capacity) $4.50 Capacity in units 30,000 Smart Company has an Auto Division that would like to begin purchasing this transformer from the Electrical Division. The Auto Division is currently purchasing 5,000 transformers each year from another company at a cost of $38 per transformer. Smart Company evaluates its division managers on the basis of divisional profits. Required: a) Assume that the Electrical Division is now selling only 25,000 transformers each year to outside customers. b) From the standpoint of the Electrical Division, what is the lowest acceptable transfer price for transformers sold to the Auto Division? c) From the standpoint of the Auto Division, what is the highest acceptable transfer price for transformers acquired from the Electrical Division

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