*USE CHART FOR QUESTION 6*

For questions 2, 3, 4, 5, and 6 Whitewater Company's Audio Division produces a speaker that is used by manufacturers of various audio products Sales and cost data on the speaker follow; Selling price per unit on the intermediate market $120 Variable cost per unit $102 Fixed costs per unit (based on capacity) $8 Capacity in units 25,000 Whitewater Company has a Hi-Fi Division that could use this speaker in one of its products. The HI-FI Division will need 5,000 speakers per year. It has received a quote of S117 per speaker from another manufacturer. Whitewater Company evaluates division managers on the basis of divisional profits. 6 1 point From the standpoint of the entire company, should the transfer take place? Yes No Use the following information for questions 2, 3, 4, 5, and 6 Whitewater Company's Audio Division produces a speaker that is used by manufacturers of various audio products Sales and cost data on the speaker follow Selling price per unit on the intermediate market $120 Variable cost per unit S102 Fixed costs per unit (based on capacity). 58 Capacity in units 25.000 Whitewater Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 5,000 speakers per year. It has received quote of S117 per speaker from another manufacturer, Whitewater Company evaluates division managers on the basis of divisional profits Assume the Audio Division sells only 20,000 speakers per year to outside customers From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? Type your answer 3 From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? Type your answer 4 1 point What is the range of acceptable transfer prices (if any) between the two divisions? Between $102 and $117 Between $101 and $117 Between $102 and $120 Between $101 and $120 00 5 I point Iflet free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? Yes No