Sako Company's Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow: Selling price per unit on the intermediate market $ 116 Variable costs per unit $ 98 Fixed costs per unit (based on capacity] $ 8 Capacity in units 25,000 Sako Company has a HiFi Division that could use this speaker in one of its products. The HiFi Division will need 5,000 speakers per year It has received a quote of $113 per speaker from another manufacturer Sako Company evaluates division managers on the basis of divisional prots. Required: 1. Assume the Audio Division sells only 20,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the HiFi Division? b. From the standpoint of the HiFi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices {if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the HiFi Division? d. From the standpoint of the entire company, should the transfer take place? 2 Assume the Audio Division is selling 22, 500 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the HiFi Division? b. From the standpoint of the HiFi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices {if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the HiFi Division? d. From the standpoint of the entire company, should the transfer take place? 3. Assume the Audio Division is selling 25,000 speakers per yearto outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the HiFi Division? b. From the standpoint of the HiFi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices {if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the HiFi Division? d. From the standpoint of the entire company, should the transfer take place? \f6 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1A and 15 Reg 2A and 25 Reg 3A and Req 2C Req 2D 35 Reg 3C Req 3D What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi- Fi Division? Assume the Audio Division is now selling only 20,000 speakers per year to outside customers. Show last Identify the range of acceptable transfer prices [if any}: O'here is not a range of acceptable transfer prices. ."here is a range of acceptable transfer prices as shown belowzo $ 107 5 Transfer price 5 $ 113 o Are the managers likely.r to agree on a transfer price? .Yes Q ONO X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1A and Req 1C Req 1D Req 2A and Req 3A and 1B 28 Req 2C Req 2D 3B Req 3C Req 3D Assume the Audio Division is selling 25,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? Show lessA Lowest acceptable transfer a 107 X price b. Highest acceptable transfer $ 113 price 0 Answer is complete but not entirer correct. Complete this question by entering your answers in the tabs below. Req 1A and Req 2A and Req 3A and 15 Reg 1C Req 1D 25 Reg 2C Req 2D 35 Req 3C Req 3D What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi- Fi Division? Assume the Audio Division is selling 25,000 speakers per year to outside customers. Identify the range of acceptable transfer prices (if any}: ."here is not a range of acceptable transfer prices. 0 O"here is a range of acceptable transfer prices as shown below: s Transfer 3 price Are the managers likely to agree on a transfer price? OYes .No 0
