Problem 2 Cooking Company has a decentralized organization with a divisional structure. Two of these divisions are the Appliance Division and the Housing Division. Each divisional manager is evaluated on the basis of ROI. The company uses the opportunity cost approach to make sure there is goal congruence. The Appliance Division produces a small automatic dishwasher the Housing Division can use in one of its models. Appliance division can produce up to 20,000 of these dishwashers per year. The variable costs of manufacturing the dishwashers are $96 The Housing Division inserts the dishwasher into the model hou5e and then sells the house. Required: Answer the requirements under each etthe required 3 areas. lfyou need to make a calculation you must provide cell references to earn credit. 1. Assume that all the dishwashers produced intemally can be sold to external customers for $275 each The Housing Division wants to buy 4,000 dishwashers per year. What should be the transfer price? Why? Make sure you explain your answer. 2. Refer to requirement #1 above. Assume there is $24 avoidable distribution costs that will not be incurred if the company sells intemally. A. Identify the minimum transfer price. B. Identify the maximum transfer price. C. Identify the actual price, assuming that negotiation splits the difference. 3. Assume that the Appliance Division is not producing at capacity and can meet the Housing Divisions request for dishwashers. The Housing Division is currently buying 3,000 dishwashers from an outside supplier at $280 Each Assume that anyjoint benet will be split evenly between the two divisions. A. What is the expected transfer price based on this infom'iation in #3 7 B. How much with the prots of Appliance Division increase, assuming that it sells the dishwashers intemally to the Housing Division? C. How much with the prots of Housing Division increase, assuming that it buys the dishwashers intemally? D. How much will the prots of the rm increase under this arrangement in #3