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Weller Industrles Is a decentralized organization with slx divisions. The company's Electrical Division produces a varlety of electrical Items, Including an ( times 52 )

image text in transcribed Weller Industrles Is a decentralized organization with slx divisions. The company's Electrical Division produces a varlety of electrical Items, Including an \\( \\times 52 \\) electrical fitting. The Electrical Division (which Is operating at capacity) sells this fittling to Its regular customers for \\( \\$ 8.90 \\) each; the fitting has a varlable manufacturing cost of \\( \\$ 4.90 \\). The company's Brake Division has asked the Electrical Division to supply It with a large quantity of \\( \\times 52 \\) fittings for only \\( \\$ 6.90 \\) each. The Brake Division, which is operating at \50 of capacity, will put the fitting Into a brake unlt that It will produce and sell to a large commerclal alrline manufacturer. The cost of the brake unit belng bult by the Brake Division follows: Although the \\( \\$ 6.90 \\) price for the \\( \\times 52 \\) fitting represents a substantlal discount from the regular \\( \\$ 8.90 \\) price, the manager of the Brake Division belleves 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 alrplane manufacturer plans to reject his bid If It is more than \\( \\$ 55 \\) per brake unlt. Thus, If the Brake Division Is forced to pay the regular \\( \\$ 8.90 \\) price for the \\( X 52 \\) 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 (ROI) 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 \\( X 52 \\) fittling to the Brake Division for \\( \\$ 6.90 \\) 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 unlt 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.)

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