World Aeronautics, which sells aircraft, has two profit centers, Systems and Assembly. Systems makes navigation equipment and transfers them to Assembly, which then puts together the aircraft for external sale. Systems can make up to 200 units a year at a variable cost of $2 million each. Assembly has variable costs of $ 14 million per aircraft. Assembly receives an order for 6 planes for a price of $25 million each.

Suppose that Systems has no ability to sell its output externally and has excess capacity. 1. Would the top management of World want the divisions to take the order? 2. What range of transfer prices would induce the managers of Systems and Assembly to take the decision you identified in requirement 1? Now suppose that Systems can sell any navigation systems it makes externally for $4 million per unit. The division incurs advertising and distribution costs of$ 270 comma 000 per system for its external sales. 3. Would the top management of World want the divisions to take the order? 4. What range of transfer prices would induce the managers of Systems and Assembly to take the decision you identified in requirement 3?

World Aeronautics, which sells aircraft, has two profit centers, Systems and Assembly. Systems makes navigation equipment and transfers them to Assembly, which then puts together the aircraft for external sale. Systems can make up to 200 units a year at a variable cost of $2 million each. Assembly has variable costs of $ 14 million per aircraft. Assembly receives an order for 6 planes for a price of $25 million each.

Requirement 1. Suppose that Systems has no ability to sell its output externally and has excess capacity. Would the top management of World want the divisions to take the order? (Enter amounts in millions, $X.XX.) - For World, each aircraft sold externally generates a positive contribution margin of ______ million. Since there are no capacity constraints, world ____ want the managers to take this order.

Requirement 3. Now suppose that Systems can sell any navigation systems it makes externally for $4 million per unit. The division incurs advertising and distribution costs of$ 370 comma 000 per system for its external sales. Would the top management of Platinum want the divisions to take the order? (Round intermediary and final calculations to three decimal places. Enter the amounts in millions, $X.XXX.)

- For the systems division, the manager will not accept any price lower than _____ million

- For the assembly division, the manager will not a pay a transfer price higher than ____ million.

Requirement 3. Now suppose that Systems can sell any navigation systems it makes externally for $4 million per unit. The division incurs advertising and distribution costs of$ 370 comma 000 per system for its external sales. Would the top management of Platinum want the divisions to take the order? (Round intermediary and final calculations to three decimal places. Enter the amounts in millions, $X.XXX.)

- A navigation unit sold directly to the external market generates a profit for platinum of $ ___ million. Top management would want the divisions to accept the order

Requirement 4. What range of transfer prices would induce the managers of Systems and Assembly to take the decision you identified in requirement 3? (Round intermediary and final calculations to three decimal places. Enter the amounts in millions, $X.XXX.)

- For the Systems division, the manager will not accept any price lower than $____ million

- For the Assembly division, the manager will not pay a transfer price higher than $_____ million.