Required information [The following information applies to the questions displayed below.] Federated Manufacturing Incorporated (FMI) produces electronic components in three divisions: industrial, commercial, and consumer products. The commercial products division annually purchases 10,000 units of part 23-6711, which the industrial division produces for use in manufacturing one of its own products. The commercial division is growing rapidly; it is expanding its production and now wants to increase its purchases of part 23-6711 to 15,000 units per year. The problem is that the industrial division is at full capacity. No new investment in the industrial division has been made for some years because top management sees little future growth in its products, so its capacity is unlikely to increase soon. The commercial division can buy part 23-6711 from Advanced Micro Incorporated or from Admiral Electric, a customer of the industrial division now purchasing 650 units of part 88-461. The industrial division's sales to Admiral would not be affected by the commercial division's decision regarding part 23-6711. 3. What are the strategic implications of your answer to requirement 1? How can FMI become more competitive in one or more of its divisions? Required: 1. What is FMl's unit cost if the commercial division buys its additional 5,000 units of part 236711 from the industrial division? From FMl's perspective, from which supplier (industrial division, Advance Micro Incorporated, or Admiral Electric) should the commercial division buy the additional units? If the sale were made internally, what would the correct transfer price be? 2. Assume that the industrial division's sales to Admiral will be canceled if the commercial division does not buy from Admiral. What would be FMl's unit costs of (a) internal transfer and (b) purchasing from Admiral in this case? Would the correct transfer price chang Complete this question by entering your answers in the tabs below. What is FMI's unit cost if the commercial division buys its additional 5,000 units of part 23-6711 from the industrial division? From FMI's perspective, from which supplier (industrial division, Advance Micro Incorporated, or Admiral Electric) should the commercial division buy the additional units? If the sale were made internally, what would the correct transfer price be? Required: 1. What is FMl's unit cost if the commercial division buys its additional 5,000 units of part 23-6711 from the industrial division? From FMl's perspective, from which supplier (industrial division, Advance Micro Incorporated, or Admiral Electric) should the commercial division buy the additional units? If the sale were made internally, what would the correct transfer price be? 2. Assume that the industrial division's sales to Admiral will be canceled if the commercial division does not buy from Admiral. What would be FMl's unit costs of (a) internal transfer and (b) purchasing from Admiral in this case? Would the correct transfer price change Complete this question by entering your answers in the tabs below. Assume that the industrial division's sales to Admiral will be canceled if the commercial division does not buy from Admiral. What would be FMI's unit costs of (a) internal transfer and (b) purchasing from Admiral in this case? Would the correct transfer price change? (Round your answer to 2 decimal places.)
