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 Ches Selling price per unit on the intermediate market Variable costs per unit Fixed costs per unit (based on capacity) Capacity in units 128 5 110 $ 25,000 Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The HI FL Division will need 5.000 speakers per year. It has received a quote of $125 per speaker from another manufacturer Sako Company evaluates division managers on the basis of divisional profits 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 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? c. What is the range of acceptable transfer prices (if any) between the two divisions? ir tent 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 toke placo? 2. Assume the Audio Division is selling 22,500 speakers per year to outside customers 3. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the H. Division D. From the standpoint of the HI-F Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division c What is the range of acceptable transfer prices of any between the two ivisions? ifieft 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 d. From the standpoint of the entire company should the transfer take place 3. Assume the Audio Division is selling 25.000 speakers per year to outside customers From the standpoint of the Audio Division what is the lowest acceptable transfer price for speakers solo to the H A DIVO? From the standpoint of the HIFI Division, what is the onest acceptable transfer price for speakers acquired from the Audio Division What is the range of acceptable transfer prices any between the two divisione 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 on? . From the standpoint of the entire company should the transfer take place
