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Weller Industries is a decentralized organization with six divisions. The company's Electrical Division produces a variety of electrical items, including an X52 electrical fitting. The

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Weller Industries is a decentralized organization with six divisions. The company's Electrical Division produces a variety of electrical items, including an X52 electrical fitting. The Electrical Division (which is operating at capacity) sells this fitting to its regular customers for $13.10 each; the fitting has a variable manufacturing cost of $8.95 The company's Brake Division has asked the Electrical Division to supply it with a large quantity of X52 fittings for only $8.90 each. The Brake Division, which is operating at 60% of capacity, 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: Purchased parts (from outside vendors) Electrical fitting X52 Other variable costs Fixed overhead and administration Total cost per brake unit 31.00 8.90 21.40 13.00 $ 74.30 Although the $8.90 price for the X52 fitting represents a substantial discount from the reqular $13.10 price, the manager of the Brake Division believes that the price

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