Weller industries is a decentralized organization with six divisions. The company's Electrical Division produces a variety of eiectricol items, including an X52 electrical fitting. The Electrical Division (which is operating at copacity) sells this fitting to its regular customers for \\( \\$ 9.60 \\) each the fitting has a variable manufacturing cost of \\( \\$ 5.11 \\). The company's Brake Division has asked the Electrical Division to supply it with a large quantity of \\( \\times 52 \\) fittings for only \\( \\$ 7.60 \\) each. The Brake Division, which is operating at \50 of copacity, will put the fitting into a brake unit that it will produce and sell to a large commercial airline manufacturer. The cost of the brake unit being built by the Brake Division follows: Although the \\( \\$ 7.60 \\) price for the X 52 fitting represents a substantial discount from the regular \\( \\$ 9.60 \\) price, the manager of the Brake Division believes the price concession is necessary if his division is to get the contract for the airplane brake units. He has heard \"through the grapevine\" that the airplane manufacturer plans to reject his bid if it is more than \\( \\$ 57 \\) per brake unit. Thus, if the Brake Division is forced to pay the regular \\( \\$ 9.60 \\) price for the \\( \\times 52 \\) fiting, it will either not get the controct or it will suffer a substantial loss at a time when it is already operating of only \50 of capacity. The manager of the Brake Division argues that the price concession is imperative to the well-being of both his division and the company as o whole. Weller industries uses return on investment (RO) to measure divisional performonce. Required: 1. Assume thot you are the monager of the Electrical Division a. What is the lowest acceptable tronsfer price for the Electrical Division? b. Would you supply the X52 fitting to the Brake Division for \\( \\$ 7.60 \\) eoch as requested? 2. Assuming the airplane brakes can be sold for \\( \\$ 57 \\), whot is the financial advantage (disadvantage) for the company as a whole (on a per unit basis) if the Electrical Division supplies fittings to the Brake Division? 3. In principle, within what range would the transfer price lie? (For all requirements, enter your \"Finaneial Disadvantage\" amounts as a negative value and round your final answers to 2 decimal places.) Weller industries is a decentralized organization with six divisions. The company's Electrical Division produces a variety of eiectricol items, including an X52 electrical fitting. The Electrical Division (which is operating at copacity) sells this fitting to its regular customers for \\( \\$ 9.60 \\) each the fitting has a variable manufacturing cost of \\( \\$ 5.11 \\). The company's Brake Division has asked the Electrical Division to supply it with a large quantity of \\( \\times 52 \\) fittings for only \\( \\$ 7.60 \\) each. The Brake Division, which is operating at \50 of copacity, will put the fitting into a brake unit that it will produce and sell to a large commercial airline manufacturer. The cost of the brake unit being built by the Brake Division follows: Although the \\( \\$ 7.60 \\) price for the X 52 fitting represents a substantial discount from the regular \\( \\$ 9.60 \\) price, the manager of the Brake Division believes the price concession is necessary if his division is to get the contract for the airplane brake units. He has heard \"through the grapevine\" that the airplane manufacturer plans to reject his bid if it is more than \\( \\$ 57 \\) per brake unit. Thus, if the Brake Division is forced to pay the regular \\( \\$ 9.60 \\) price for the \\( \\times 52 \\) fiting, it will either not get the controct or it will suffer a substantial loss at a time when it is already operating of only \50 of capacity. The manager of the Brake Division argues that the price concession is imperative to the well-being of both his division and the company as o whole. Weller industries uses return on investment (RO) to measure divisional performonce. Required: 1. Assume thot you are the monager of the Electrical Division a. What is the lowest acceptable tronsfer price for the Electrical Division? b. Would you supply the X52 fitting to the Brake Division for \\( \\$ 7.60 \\) eoch as requested? 2. Assuming the airplane brakes can be sold for \\( \\$ 57 \\), whot is the financial advantage (disadvantage) for the company as a whole (on a per unit basis) if the Electrical Division supplies fittings to the Brake Division? 3. In principle, within what range would the transfer price lie? (For all requirements, enter your \"Finaneial Disadvantage\" amounts as a negative value and round your final answers to 2 decimal places.)
