Sako Company's Audlo Division produces a speaker used by manufacturers of varlous audlo 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

$$108$ $$90$ $$825,000$

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 recelved a quote of $$105$ per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits.

Requlred:

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 negotlate 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?

Assume the Audio Division Is selling $22,500$ speakers per year to outside customers.

a$.$ From the standpoint of the Audlo 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?

Assume the Audio Division is selling $25,000$ speakers per year to outside customers.

a$.$ From the standpoint of the Audlo Division, what is the lowest acceptable transfer price for speakers sold to the HI$-$FI DIvislon?

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 negotlate 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.

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