(Solved): Weller Industries is a decentralized organization with six divisions. The company's Electrical Di ...

Weller Industries is a decentralized organization with six divisions. The company's Electrical Division produces a variety of electrical Items, including an X52 electrical fitting. The Electrical Division (which is operating at capacity) sells this fitting to its regular customers for

each; the fitting has a variable manufacturing cost of

. The company's Brake Division has asked the Electrical Division to supply it with a large quantity of

fittings for only

each. The Brake Division, which is operating at

of capacity, will put the fitting into a brake unit that it will produce and sell to a large commercial airline manufacturer. The cost of the brake unit being bullt by the Brake Division follows: Although the

price for the

filting represents a substantial discount from the regular

price, the manager of the Brake Division belleves the price concession is necessary if his division is to get the contract for the airplane brake units. He has heard "through the grapevine" that the airplane manufacturer plans to reject his bid if it is more than

per brake unit. Thus, if the Brake Division is forced to pay the regular

price for the

filting, It will elther not get the contract or it will suffer a substantial loss at a time when it is already operating at only

of capacity. The manager of the Brake Division argues that the price concession is imperative to the well-being of both his division and the company as a whole. Weller Industries uses return on Investment (ROI) to measure divisional performance. Required: Assume that you are the manager of the Electrical Division. a. What is the Electrical Division's lowest acceptable transfer price? b. Would you supply the

fitting to the Brake Division for

each as requested? Assuming the airplane brakes can be sold for

, what is the financial advantage (disadvantage) for the company as a whole (on a per unit basis) if the Electrical Division supplies fittings to the Brake Division? In principle, within what range would the transfer price lie? Note: For all requirements, enter your "FInanclal Dlsadvantage" amounts as a negatlve value and round your final answers to 2 decimal places.