The Violet Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacily, incurs an incremental manufacturing cost of $70 per screen. The SD can sel all its output to the cutside market at a price of $105 per screen, after incurring a variable marketing and fistribution cost of $9 per screen. If the AD purchases screens from outside suppliers at a price of $105 per screen, it will incur a variable purchasing cost of $2 per screen. Violers division managers can act autonomously to maximize their own division's operating income. Read the regurements. 1. What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD? 2. What is the maximum transfer price at which the AD manager would be willing to purchase screens from the SD? 3. Now suppose that the SD can sell only 70% of its output capacity of 10,000 screens per month on the open market. Capacity cannot be reduced in the short run. The AD can assemble and sell more than 10,000 TV sets per month. a. What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD? b. From the point of view of Violet's management, how much of the SD output should be transferred to the AD? c. If Violet mandates the SD and AD managers to "split the difference" on the minimum and maximum transfer prices they would be willing to negotiate over, what would be the resulting transfer price? Does this price achieve the outcome desired in requirement 3b