Divisions X and Y are two decentralized divisions of the T. O. Company. Seventy percent of the output of Division X is transferred to Division Y at a negotiated price of $9 per unit. The following are the estimated revenues and expenses for X and Y for 19X1: pg26)

Required:
Determine profitability for each division under the six different methods of transfer pricing. Assume a markup of 20% of full cost when using the cost plus method. Use the synthetic market price and full cost plus 10% of full cost when using the dual transfer price method.

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Sales (3,000 units). DIVISION X Sales to Division Y (7,000 units).. Variable costs. Fixed costs (annual). DIVISION Y $30,000 ? Sales $175,000 Cost of units from Division X. ? $2 per unit Other variable costs ($4 per unit). $28,000 $60,000 Fixed costs $75,000