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4. Wheel Division of TG Corporation has the capacity for making 80,000 wheel sets per year and regularly sells 65,000 each year on the outside
4. Wheel Division of TG Corporation has the capacity for making 80,000 wheel sets per year and regularly sells 65,000 each year on the outside market. The regular sales price is $111 per wheel set, and the variable production cost per unit is $75. Division Q of TG Corporation currently buys 20,000 wheel sets (of the kind made by Wheel Division) yearly from an outside supplier at a price of $100 per wheel set. Division Q would like to buy the 20,000 wheel sets it needs annually from Wheel Division at $95 per wheel set. A) Is there an acceptable Transfer Price range? What would it be? Show any necessary calculations to receive full marks. B) What would be the amount of change in annual operating income for the TG company as a whole, compared to what it is currently? Show any necessary calculations to receive full marks
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