21 9 points eBook Required Information Exercise 11-13 (Algo) Transfer Pricing Situations [LO11-3] [The following Information applies to the questions displayed below.] In each of the cases below, assume Division X has a product that can be sold to outside customers or to Division Y of the same company. The managers of the divisions are evaluated based on their divisional profits. Case A B Hint Division X: Capacity in units 103,000 Number of units being sold to outside customers 103,000 96,000 74,000 Selling price per unit to outside customers Print Variable costs per unit $ 54 $ 25 $ 26 $ 17 Fixed costs per unit (based on capacity) $ 8 $ 6 Division Y: Number of units needed for production 22,000 22,000 Purchase price per unit now being paid to an outside supplier $ 47 $ 34 Exercise 11-13 (Algo) Part 1 Required: 1. Refer to the data in case A above. Assume in this case $1 per unit in variable selling costs can be avoided on Intracompany sales. a. What is the lowest acceptable transfer price from the perspective of the selling division? b. What is the highest acceptable transfer price from the perspective of the buying division? c. What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to negotiate and make decisions on their own, will a transfer probably take place? Complete this question by entering your answers in the tabs below. Required 1A Required 1B Required 1C What is the lowest acceptable transfer price from the perspective of the selling division? Lowest acceptable transfer price < Required 1A Required 1B >