E25-9 Identifying Minimum and Maximum Transfer Prices and Determining the Effect on Each Division’s Profit Womack Company is made up of two divisions, A and B. Division A produces a widget that Division B uses in the production of its product. Variable cost per widget is $0.50; full cost is $0.70. Comparable widgets sell on the open market for $1.10 each. Division A can produce up to 2,000,000 widgets per year but is currently operating at only 50 percent capacity. Division B expects to use 100,000 widgets in the current year. Required: 1. Determine the minimum and maximum transfers prices. 2. Calculate Womack Company’s total benefit of having the widgets transferred between these divisions. 3. If the transfer price is set at $0.50 per unit, determine how much profit Division A will receive from the transfer. Determine how much Division B will save by not purchasing the widgets on the open market. 4. If the transfer price is set at $1.10 per unit, determine how much profit Division A will receive from the transfer. Determine how much Division B will save by not purchasing the widgets on the open market. 5. What transfer price would you recommend to split the difference?