问答题

2.Mobe Co manufactures electronic mobility scooters. The company is split into two divisions: the scooter division(Division S) and the motor division (Division M). Division M supplies electronic motors to both Division S and toexternal customers. The two divisions run as autonomously as possible, subject to the group’s current policy thatDivision M must make internal sales first before selling outside the group; and that Division S must always buy itsmotors from Division M. However, this company policy, together with the transfer price which Division M chargesDivision S, is currently under review. Details of the two divisions are given below. Division S Division S’s budget for the coming year shows that 35,000 electronic motors will be needed. An external supplier could supply these to Division S for $800 each. Division M Division M has the capacity to produce a total of 60,000 electronic motors per year. Details of Division M’s budget,which has just been prepared for the forthcoming year, are as follows: Budgeted sales volume (units) 60,000 Selling price per unit for external sales of motors $850 Variable costs per unit for external sales of motors $770 The variable cost per unit for motors sold to Division S is $30 per unit lower due to cost savings on distribution and packaging. Maximum external demand for the motors is 30,000 units per year. Required: