Sako Company's Audio Division produces a speaker 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 $ 68 $ 50 $ 8 25,000 Sako Company has a 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 $65 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? 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? 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. Required 1A and 1B Required 1C Required 1D Required 2A and 2B Required 2C Required 2D Required 3A and 3B Required 3C Required 3D 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? a. Lowest acceptable transfer price b. Highest acceptable transfer price Show less Required 1A and 1B Required 1C Required 1D Required 2A and 2B Required 2C Required 2D Required 3A and 3B Required 3C Required 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. Range of acceptable transfer prices Are the managers likely to agree on a transfer price? Required 1A and 1B Required 1C Required 1D Required 2A Required 2C Required 2D Required 3A Required 3C Required 3D and 3B and 2B From the standpoint of the entire company, should the transfer take place? Assume the Audio Division is now selling only 20,000 speakers per year to outside customers. Should the transfer take place? Show less Required 1A Required 1C Required 1D and 1B Required 2A and 2B Required 2C Required 2D Required 3A and 3B Required 3C Required 3D 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? a. Lowest acceptable transfer price b. Highest acceptable transfer price Show less Required 1A and 1B Required 1C Required 1D Required 2A Required 2C Required 2D Required 3A Required 3C Required 3D and 2B and 3B 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 22,500 speakers per year to outside customers. Range of acceptable transfer prices Are the managers likely to agree on a transfer price? Required 1A Required 1C Required 1D Required 2A and 2B Required 2C Required 2D Required 3A Required 3C Required 3D and 1B and 3B From the standpoint of the entire company, should the transfer take place? Assume the Audio Division is selling 22,500 speakers per year to outside customers. Should the transfer take place? Required 1A and 1B Required 1C Required 1D Required 2A and 2B Required 2C Required 2D Required 3A and 3B Required 3C Required 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? a. Lowest acceptable transfer price b. Highest acceptable transfer price Show less 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? Range of acceptable transfer prices Are the managers likely to agree on a transfer price? Required 1A and 1B Required 1C Required 1D Required 2A and 2B Required 2C Required 2D Required 3A and 3B Required 3C Required 3D From the standpoint of the entire company, should the transfer take place? Assume the Audio Division is selling 25,000 speakers per year to outside customers. Should the transfer take place?