14 In each of the cases below, assume that Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits: 6 points 01:38:53 eBook Division X: Capacity in units Number of units being sold to outside customers Selling price per unit to outside customers Variable costs per unit Fixed costs per unit (based on capacity) Division Y: Number of units needed for production Purchase price per unit now being paid to an outside supplier Required: Case A B 170,000 170,000 170,000 150,000 57 $ 40 34 $ 23 7 $ 5 20,000 20,000 52 $ 39 1-a. Refer to the data in case A above. Assume that $4 per unit in variable selling costs can be avoided on intracompany sales. Determine the transfer price of the selling division. Print Transfer price 1-b. If the managers are free to negotiate and make decisions on their own, will a transfer take place? Yes No 2-a. Refer to the data in case B above. In this case there will be no reduction in variable selling costs on intracompany sales. Determine the transfer price of the selling division. Transfer price