4 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: A B 10 points Division X: Capacity in units Number of units being sold to outside customers Selling price per unit to outside customers Variable costs per unit Pixed 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 290,000 290,000 290,000 262,000 s 69 $ 52 $ 40 $ 29 S 11 $ 9 9 X 03.5432 Skipsed 28,000 64 $ 28,000 51 S Required: 1-a. Refer to the data in case A above. Assume that $2 per unit in variable selling costs can be avoided on intracompany sales. Determine the transfer price of the selling division. Transfer price 1-b. If the managers are free to negotiate and make decisions on their own, will a transfer take place? O Yes O No 2-a. Refer to the data in case B above. In this case there will be no reduction in variable selling costs o Screenshot y sales. Determine the transfer price of the selling division. 4 O Yes O No 10 points 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. X 93.54.26 Transfer price Skipped 2-b. If the managers are free to negotiate and make decisions on their own, will a transfer take place? Yes O No 2-c. What is the range of transfer price the managers of both divisions should agree? The transfer price can be a lowest of and a highest of Screenshot