Weller Industries is a decentralized organization with six divisions. The company's Electrical Division produces a variety of electrical Items, including an 52 electrical fitting. The Electrical Division (which is operating at capacity) sells this fitting to its regular customers for $9.60 each; the fitting has a varlable manufacturing cost of $5.11 The company's Brake Division has asked the Electrical Division to supply it with a large quantity of 52 fitings for oniy $760 each. The Brake Divislon, which is operating at 50% of capacity, will put the fitting into a brake unit that it will produce and sell to a large commercial airline manufactures. The cost of the brake unit being bullt by the Brake Division follows: Although the $760 price for the X52 fiting represents a substantial discount from the regular $960 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 Erake Division is forced to pay the regular $960 price for the 52 fitting. It will either not get the contract or it wil sulfer a substantial loss at a time when it is already operating at only 50% of capacity. The manager of the Brake Dwision argues that the price concession is imperative to the well being of both his division and the company as a whole. Weller Industries uses return on investment (ROV) to measure divisional performance Required: 1. Assume that you are the manager of the Electrical Division. a. What is the lowest acceptable transfer pace for the Electrical Division? b. Would you supply the 52 fitting to the Brake Division for $160 each as requested? 2. Assuming the aliplane brakes can be sold for \$57, what is the financial advontage (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 lle? (For all requirements, enter your "Financial Disodvontoge" amounts as a negative value and round your finol answers to 2 decimal Required: 1. Assume that you are the manager of the Electrical Division. a. What is the lowest acceptable transfer price for the Electrical Division? b. Would you supply the 52 fitting to the Brake Division for $7.60 each as requested? 2. Assuming the airplane brakes can be sold for $57, what 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 oll requirements, enter your "Financial Disodvantage" amounts as a negative value and round your final answers to 2 decimal places.)
