3A AND 3B Sako Company's Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data onthe speaker follow:Selling price per unit on the intermediate marketVariable costs per unitFixed costs per unit (based on capacity)Capacity in units$128$ 110$825,000Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 5,000 speakers peryear. It has received a quote of $125 per speaker from another manufacturer. Sako Company evaluates division managers on the basisof divisional profits.Required:1. Assume the Audio Division sells only 20,000 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 AudioDivision?c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, wouldyou expect the division managers to voluntarily agree to the transfer of 5,000 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 22,500 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 AudioDivision?c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, wouldyou expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division?d. From the standpoint of the entire company, should the transfer take place?3. Assume the Audio Division is selling 25,000 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 AudioDivision?c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, wouldyou expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division?d From the standpoint of the entire company should the transfer take place?Prev1 of 2wwwwwwENext > c. What is the range of acceptable transfer prices (if any) between the two divisions? if left free toyou expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division?d. From the standpoint of the entire company, should the transfer take place?Complete this question by entering your answers in the tabs below.Req 1A and1BReq 1CReq 1DReq 2A and2Ba. Lowest acceptable transfer priceb. Highest acceptable transfer priceReq 2C$119Req 2DAssume the Audio Division is selling 25,000 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-FiDivision?Req 3A and3Bb. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from theAudio Division?Req 2DReq 30Req 3CReq 3D>Show less

Variable costs are costs that varies with the change in the level of output whereas fixed costs are…

Answered: 3A AND 3B

3A AND 3B

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q