1. Assume Division A makes a part that could be used by Division B. Division A has a capacity of 30,000 parts. They are currently selling 20,000 parts to outside customers. Divsion B needs 10,000 parts. The lowest acceptable transfer price (per part) for Division A would be:

Variable cost of producing one part

Full absorption cost of producing one part.

The selling price to outside customers.

The lowest price charged by competitors of Division A

2. Assume Division A makes a part that could be used by Division B. Division A has a capacity of 30,000 parts. They are currently selling 20,000 parts to outside customers. Divsion B needs 10,000 parts. The highest acceptable transfer price (per part) for Division B would be:

Variable cost of producing one part

Full absorption cost of producing one part.

The selling price to outside customers.

The lowest price charged by competitors of Division A