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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
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 Variable costs per unit Fixed costs per unit (based on capacity) Capacity in units $40 $19 $7 55,000 Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 9,000 speakers per year. It has received a quote of $37 per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits Requirement 1 Assume that the Audio Division is now selling only 46,000 speakers per year to outside customers (a) From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? (Omit the "$" sign in your response.) Transfer price (b) What is the range of transfer price the manager's of both divisions should agree? (Omit the "$" sign in your response.) From $ to $ (c) If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 9,000 speakers from the Audio Division to the Hi-Fi Division? (Click to select) V (d) From the standpoint of the entire company, should the transfer take place Click to select
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