71. The following information is available for the two divisions of CPAECON CO.: Division A Selling price to outside market Standard unit-level costs $55 35 Division B Selling price of finished product Standard unit-level costs for Division B $95 25 Division A has no excess production capacity. Required: 1) In order to ensure the best use of the productive capacity of A, what transfer price should be set by Division A and what effect does this transfer price have on the overall margin for the company? Is the answer goal congruent under the general rule? 2) Should Division B accept a special order for its product if the selling price is reduced to $70. Use your answer from #1 and explain. 3) Would your answer to +2 change if Division A had excess capacity? Explain. 72. Pacific Mill consists of two operating divisions, a Cutting division and the Assembly division. The Cutting division prepares cords of timber at its sawmills, while the Assembly division prepares the cut cords of lumber into board-feet of finished wood (which is sold to various furniture manufacturers). During the most recent year the Cutting division prepared 60,000 cords of wood at a cost of $1,320,000. All of this lumber was transferred to the Assembly division, where incremental costs of $12 per cord were added. Pacific Mill sold the 600,000 board-feet of finished wood for $5,000,000. Required: 1. What would the operating income for each of the two divisions be if the transfer price from Cutting to Assembly was set at the cord cost of $22 per cord? (Show calculations.) 2. What would the operating income for each of the two divisions be if the transfer price is set at $18 per cord? (Show calculations.) 3. Since Cutting transfers all of its output internally (to Assembly), does the manager of Cutting care what price is selected? Why? Should Cutting be treated as a cost center under the circumstances (rather than a profit center or investment center)? Explain