which is operating at capachy, incurs an incremental manulacturing cost of 560 per screen. The 50 can nel all its output to the outside market at a price of 5110 per screen, atier Inconing a varlable marketing and detribution cost of $9 ner sereen. If the AD purchases screens from oulaide suppliers at a price of 5110 per screen, it will incur a variable purchaning cost of 53 per screen, Lavenders division managers can act ivtononvousty to maximize their own divisioris operating income. Requirement 1 , What is the minimum transfer price at which the SD mannger would be wiling to - set screens to the AD? Requirements 1. What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD? 2. What is the maximum transfer price at which the AD manager would be willing to purchase screens from the SD? 3. Now suppose that the SD can sell only 90% of its output capacity of 20,000 screens per month on the open market. Capacity cannot be reduced in the short run. The AD can assemble and sell more than 20,000 TV sets per month. a. What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD? b. From the point of view of Lavender's management, how much of the SD output should be transferred to the AD ? c. If Lavender mandates the SD and AD managers to "split the difference" on the minimum and maximum transfer prices they would be willing to negotiate over, what would be the resulting transfer price? Does this price achieve the outcome desired in requirement 3b