1) DIVISION X HAS THE FOLLOWING INFORMATION:

CURRENT UNITS 22,500

CAPACITY UNITS 28,000

SALES PRICE PER UNIT 17

VC/UNIT 10

WHAT IS THE TOTAL TRANSFER PRICE DIVISION X WOULD CHARGE DIVISION Y FOR THE TRANSFER OF 10,000 UNITS?

TRANSFER PRICE___________

2) REFER TO QUESTION # 1.ASSUMING DIVISION Y CAN BUY A SIMILAR UNIT FROM AN OUTSIDE SUPPLIER FOR $16/UNIT, HOW MANY UNITS WILL IT BUY FROM DIVISION X?

UNITS __________

3)REFER TO QUESTION # 1. TRUE OR FALSE. THE TOTAL $CM OF DIVISION X SHOULD

REMAIN THE SAME WHETHER IT TRANSFERS ZERO UNITS, 5,500 UNITS OR 10,000UNITS TO DIVISION Y.

TRUE