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Problem 11A-6 Basic Transfer Pricing [L011-5 Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own division's return on investment (ROI). Assume the following information relative to the two divisions: Case Alpha Division: Capacity in units Number of units now being sold to 53,000 286,000 103,000 195,000 53,000 286,00076,000195,000 47 outside customers Selling price per unit to outside customers variable costs per unit Fixed costs per unit (based on $ 99 45$ 23 $ 68 $ 43 $ $ 63 $ capacity) $24 15 25 Beta Division: Number of units needed annually Purchase price now being paid to 75,00 10,100 75,000 21,000 64,000 be pald to an outside supplier $91 4268 Before any purchase discount. Managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated. Required: 1. Refer to case 1 shown above. Alpha Division can avoid $4 per unit in commissions on any sales to Beta Division. K Prev 4 of 5 Next