Help Sako Company\'s Audio Division produces a speaker that is used by manufactu
ID: 2432499 • Letter: H
Question
Help Sako Company's Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on he speaker follow: Selling price per unit on the inte r unit S21 Fixed costs per unit (based on capacity) Capacity in units 55,000 Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 8,000 speakers per year. It has received a quote of $37 per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits. Required 1. Assume the Audio Division is now selling only 47,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 8,000 speakers from the Audio Division to the Hi-Fi Division? d. From the standpoint of the entire company, should the transfer take place? 2. Assume the Audio Division is selling all of the speakers it can produce to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Divi b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 8,000 speakers from the Audio Division to the Hi-Fi Divisio d. From the standpoint of the entire company, should the transfer take place? n? 1 of 4 Next >Explanation / Answer
As per the corresponding two images I believe you need answers of these two only. Let me know via comment section if this is not the case. Thanks
1.c There is a range of acceptable transfer price of $ 21 to $ 37
2c. There is no range of acceptable transfer price becuase selling division should have atleast 41 but buying division will not pay more than $ 37
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