SOLVE 2A AND 2B PLEASE DO IT FAST
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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SOLVE 2A AND 2B PLEASE DO IT FAST

Transcribed Image Text: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 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 and
1B
Req 1C
Req 1D
www.
Red 2A and
2B
a. Lowest acceptable transfer price
b. Highest acceptable transfer price
Req 2C
<
Req 2D
Req 3A and
3B
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?
Req 1D
b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the
Audio Division?
Req 30
Req 3D
Req 2C >
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Transcribed Image Text:Sako Company's Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on
the speaker follow:
Selling price per unit on the intermediate market
Variable costs per unit
Fixed costs per unit (based on capacity)
Capacity in units
$128
$ 110
$8
25,000
Sako 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 per
year. It has received a quote of $125 per speaker from another manufacturer. Sako Company evaluates division managers on the basis
of 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 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 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 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 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 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 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?
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