10 Question 4 Gamma Company has two divisions. Alpha and Beta. Division Alpha makes and sells a product with the following price and costs for 2009. These are expected to remain constant for year 2010. Selling price per unit Variable cost per unit Annual fixed cost s 25 $ 15 $230.250 Fura The maximum capacity of division Alpha is 75.000 units. In 2009. division Deta purchased 20.000 units of this same product from an outside supplier at $22 per unit. Division Beta is considering buying 20.000 units of this product for 2010 from division Alpha. The outside supplier said it will keep its price at $22 for next year. Required a. According to the general transfer pricing formula. indicate what price division Alpha should charge to division Beta under each of the following conditions: i) Division Alpha can sell only 57.000 units to external customers in 2010. ii) Division Alpha can sell 75.000 units to external customers in 2010. 3 2 b. If division Alpha insists on the price determined in part (alii), explain whether a transfer will take place. 2 c. Identify and briefly explain puo factors that a company should take into consideration when making a decision about establishing a division in a foreign count 3 d. Briefly describe each of the three general methods to establish transfer prices