Sembotix Company has several divisions including a Semiconductor Division that sells semiconduc- tors to both internal and external customers. The companys X-ray Division uses semiconductors as a component in its final product and is evaluating whether to purchase them from the Semiconductor Division or from an external supplier. The market price for semiconductors is $100 per 100 semicon- ductors. Dave Bryant is the controller of the X-ray Division, and Howard Hillman is the controller of the Semiconductor Division. The following conversation took place between Dave and Howard:

Dave: I hear you are having problems selling semiconductors out of your division. Maybe I can help.

Howard: Youve got that right. Were producing and selling at about 90% of our capacity to outsiders. Last year, we were selling 100% of capacity. Would it be possible for your division to pick up some of our excess capacity? After all, we are part of the same company.

Dave: What kind of price could you give me?

Howard: Well, you know as well as I that we are under strict profit responsibility in our divisions, so I would expect to get market price, $100 for 100 semiconductors.

Dave: Im not so sure we can swing that. I was expecting a price break from a sister division.

Howard: Hey, I can only take this sister stuff so far. If I give you a price break, our profits will fall from last years levels. I dont think I could explain that. Im sorry, but I must remain firm market price. After all, its only fairthats what you would have to pay from an external supplier.

Dave: Fair or not, I think well pass. Sorry we couldnt have helped.

Instructions:

Answer the question below using 150 words or more. After this, make sure to reply to one of your peer's responses using 100 words or more.

Is Dave behaving unethically by trying to force the Semiconductor Division into a price break? Comment on Howards reactions.