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 internediate market Variable costs per unit Fixed costs per unit (based on capacity) Capacity in units $ 112 $ 94 $ B 25,000 a Sako Company has e Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 5,000 speakers per year. It has received a quote of S109 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 customers a From point of the Audio Division the lowest octablesfer price for speakers sold to the Hi-Fi Division? b. Frome stannt of the Hi-Fi Divi What is highest optable tro price for speakers acquire Audio Division c. Whate range optablemsfer prices (if any) the two divisions? ingotiate without internce, would you expecke division me voluntarily agree to the fer of 5.000 speakers from Audio Division to the Hivision? d. From the standpoint of the the 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 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? 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? 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 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? 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? d. From the standpoint of the entire company, should the transfer take place? Complete this question by entering your answers in the tabs below. Reg 1A and 11 Reg 10 Roq 1D Reg 2A and 25 Reg 2c Reg 20 Reg 3A and 18 Steg 30 Reg 30 Assume the Audio Division is selling 22.500 speakers per year to outside customers a. From the standpoint of the Audin Division, what is the lowest acceptable transfer price for speakers sold to the H- Division? b. From the standpoint of the HEF Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? Lowe acceptable transfer price Highest acceptable transfer price D
