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3. Alphabet Co. owns both division A and division B. Division A makes watzits. Division B is needing watzits in their production. Based on the
3. Alphabet Co. owns both division A and division B. Division A makes watzits. Division B is needing watzits in their production. Based on the information below, should the managers of each entity agree to an internal transfer? Division A: Seller 70,000 watzits 65,000 watzits $11 Capacity in units # 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 B: Buyer # of units needed annually $9.50 $18 5,000 watzits $11.25 Purchase price now being paid to an outside supplier a. Based on the information above, is it possible for Division A and Division B to agree to a mutually acceptable transfer price and if so, within what range would that transfer price be? b. If the # of units being sold to outside customers is 70,000 watzits, is it possible for Division A and Division B to agree to a mutually acceptable transfer price and if so, within what range would that transfer price be? Based on the information above, is it possible for Division A and Division B to agree to a mutually acceptable transfer price and if so, within what range would that transfer price be
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