Rose and Jasmine are divisions within the same company. The managers of both divisions are evaluated based on their own division's return on investment (ROI). Assume the following information relative to the two divisions: Rose Division: Capacity in units Number of units how being sold to outside customer Selling price per unit to outside customer Case 1 Case 2 Case 3 80,000 400,000 300,000 80,000 400,000 300,000 $30 $90 $50 Variable cost per unit $18 $65 $26 Fixed costs per unit (based on capacity) $6 $15 $9 Jasmine Division: Number of units needed annually 5,000 30,000 120,000 Purchase price now being paid to an outside supplier $27 $89 Managers are free to decide if they will participate in any internal transfers. All the transfer prices are negotiated. Problem 1 Refer to case 1 shown above. Rose Division can avoid $2 per unit in commissions on any sales to Jasmine Division. Will the managers agree to transfer, and if so, within what range will the transfer price be? Explain. Problem 2 Refer to case 2 shown above. A study indicates that Rose Division can avoid $5 per unit in shipping costs on any sales to Jasmine Division. Will the managers agree to transfer, and if so, within what range will the transfer price be? Explain. Problem 3 Refer to case 3 show above. Assume that Jasmine Division wants Rose Division to provide it with 120,000 units of a different product from the one that Rose Division is now producing. The new product would require $21 per unit in variable costs and would require that Rose Division cut back production of its present product by 45,000 units annually. What is the lowest acceptable transfer price from Rose Division's perspective