NAME: DATE: ACTIVITY George, Inc. has a Valve Division that manufactures and sells a standard valve: Capacity in units Selling price to outside customers Variable costs per unit Fixed costs per unit (based on capacity) 100,000 P1,500 800 450 SCORE: The company has a Pump Division that could use this valve in one of its pumps. The Pump Division is currently purchasing 10,000 valves per year from an outside supplier at a cost of P1,450 per valve. Required (7 items x 5 points): 1. Assume that the Valve Division has enough excess capacity to handle all the Pump Division's needs. What is the minimum price that the Valve Division is willing to accept? 2. From the point of view of the whole company, should the transfer take place? Why or why not? 3. Assume that the Valve Division is selling all the valves it can produce to outside customers. What is the minimum price that the Valve Division is willing to accept? 4. From the point of view of the whole company, should the transfer take place? Why or why not? 5. Assume that the Valve Division is selling all the valves it can produce to outside customers. Also assume that P150 in variable expenses can be avoided on transfers within the company, due to reduced selling costs. What is the minimum price that the Valve Division is willing to accept? 6. From the point of view of the whole company, should the transfer take place? Why or why not? Refer to the original data above. Assume the Pump Division needs 20,000 special high-pressure valves per year. The Valve Division's variable costs to manufacture and ship the special valve would be P1,000 per unit. To produce these special valves, the Valve Division would have to reduce its production and sales of regular valves from 100,000 units per year to 70,000 units per year. 7. As far as the Valve Division is concerned, what is the minimum price it is willing to accept? Rubric for problem solving: Performance Indicators Correct accounts and amounts used Points 3 Computed final amounts are correct/balanced Total 2 5 Rubric for short answer: Criteria Performance Indicators Content Provided pieces of evidence, Points 3 supporting details, and factual scenarios Organization Expressed the points in a clear and 2 of ideas logical arrangement of ideas TOTAL 5