Seko 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 (hased on capacity) Capacity in unit $ 112 5 90 $ 3 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 $109 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 anybetween the two divisions? I 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? es 2. Assume the Audio Division is selling 22.500 speakers per year to outside customers . From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the H-F 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? It le 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. From the standpoint of the Audio Division what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? 6. 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? left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of S.000 speakers from the Audio Division to the H-F 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. Rua 1A and 15 Reg 10 Reg 10 Reg 2 and 28 Res 20 Reg 20 Red Band Reg 3 Reg 30 What is the range of comptable transfer prioritany) between the two division? 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 Hin Division Assume the Audio Division is now selling only 20,000 species per year to outside customers vity the range of complete transfers there is not a range of series There is a range of contrasten shown below Trio Pret manager to go on a transfer No
