Question: if possible please show work, thank you (2) Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based

 if possible please show work, thank you (2) Alpha and Betaare divisions within the same company. The managers of both divisions areevaluated based on their own division's return on investment (ROl). Assume thefollowing information relative to the two divisions: 1. Refer to case 1shown above. Alpha Division can avold $2 per unit in commissions on

if possible please show work, thank you (2)

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 (ROl). Assume the following information relative to the two divisions: 1. Refer to case 1 shown above. Alpha Division can avold $2 per unit in commissions on any sales to Beta Division. a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (If any) between the two divisions? Will the managers probably agree to a transfer? 2. Refer to case 2 shown above. A study indicates that Alpha Division can avold $5 per unit in shipping costs on any sales to Beta Division. a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (If any) between the two divislons? Would you expect any disagreement between the two divisional managers over what the exact transfer price should be? d. Assume Alpha Division offers to sell 319,000 units to Beta Division for $126 per unit and that Beta Division refuses this price. What will be the loss In potential profits for the company as a whole? 3. Refer to case 3 shown above. Assume that Beta Division is now recelving an 8% price discount from the outside supplier. a. What is Alpha Divislon's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (If any) between the two divisions? Will the managers probably agree to a transfer? d. Assume Beta DIvislon offers to purchase 39,000 units from Alpha Dlvislon at $60 per unit. If Alpha Divislon accepts this price, would you expect its ROI to increase, decrease, or remain unchanged? 4. Refer to case 4 shown above. Assume that Beta Division wants Alpha Division to provide it with 123,800 units of a different product from the one Alpha Division is producing now. The new product would require $59 per unit in varlable costs and would require that Alpha Division cut back production of its present product by 46,425 units annually. What is Alpha DIvision's lowest acceptable transfer price

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!