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Part $1$

TJTJ

Electronics is a manufacturer with two$$ departments: computer chips and cell phones. The computer chip that is produced in the Chips Department can be sold to customers at

$ $6\mathrm{.}25$$$6\mathrm{.}25$

per chip. The costs associated with the computer chips are as$$ follows:

View the computer chip costs.

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The Cell Phone Department has been purchasing the chips that it needs for

$$$$4\mathrm{.}004\mathrm{.}00$

per chip from

Chip MastersChip$$Masters$,$

but the manager was thinking that if the Chips Department could supply the chips for less than what

Chip MastersChip$$Masters

is$$ asking, then it would arrange a transfer between departments instead of giving the business to an external company.

If the Cell Phone Department needs

$160$ comma $000160,000$

computer chips and current production in the Chips Department is

$320$ comma $000320,000$

$$chips$,$ should a transfer take$$ place? If$$ so$,$ at what$$ price? $($Note: For internal$$ transfers, the selling and administrative costs are reduced to

$ $1\mathrm{.}05$$$1\mathrm{.}05$

per$$ unit.$)$ What other qualitative factors might need to be$$ considered?