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Part $1$

TZTZ

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

$ $7\mathrm{.}00$$$7\mathrm{.}00$

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{.}754\mathrm{.}75$

per chip from

eChipseChips$,$

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

eChipseChips

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

$150$ comma $000150,000$

computer chips and current production in the Chips Department is

$300$ comma $000300,000$

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

$ $0\mathrm{.}85$$$0\mathrm{.}85$

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

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Part $1$

$$First$,$ let's determine if a transfer should take place by determining the minimum transfer price. $($Round your answer to the nearest$$ cent.$)$

What is the minimum transfer price?

$$3\mathrm{.}35$

Should the internal transfer take place?

Yes

Part $2$

$$Now$,$ find the range of the price for the internal transfer.

What is the lowest price for the internal transfer?

What is the highest price for the internal transfer?