Weller Industrles Is a decentralized organization with six divisions. The company's Electrical Division produces a varlety of electrical Items, Including an X52 electrical fitting. The

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Weller Industrles Is a decentralized organization with six divisions. The company's Electrical Division produces a varlety of electrical Items, Including an X52 electrical fitting. The Electrical Division (which is operating at capacity) sells this fitting to its regular customers for $8.70 each; the fitting has a varlable manufacturing cost of $4.80. The company's Brake Division has asked the Electrical Division to supply it with a large quantity of X52 fittings for only $6.70 each. The Brake Division, which is operating at 50% of capacity, will put the fitting into a brake unit that it will produce and sell to a large commerclal alrline manufacturer. The cost of the brake unit being bult by the Brake Division follows: Although the $6.70 price for the X52 fitting represents a substantlal discount from the regular $8.70 price, the manager of the Brake Division believes the price concession is necessary If his division Is to get the contract for the alrplane brake units. He has heard "through the grapevine" that the airplane manufacturer plans to reject his bid if It is more than $55 per brake unit. Thus, If the Brake Division is forced to pay the regular $8.70 price for the X52 fitting, It will elther not get the contract or it will suffer a substantlal loss at a time when it Is already operating at 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 a whole. Weller Industrles uses return on Investment (ROl) to measure divisional performance. 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 X52 fitting to the Brake Division for $6.70 each as requested? 2. Assuming the alrplane brakes can be sold for $55, what is the financlal advantage (dlsadvantage) 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 "Financlal Disadvantage" amounts as a negatlve value and round your final answers to 2 decimal places.)