3. A company has two profit centres, Centre A and Centre B. Centre A supplies Centre B with a part-finished product. Centre B completes the production and sells the finished units in the market at $35 per unit.

Budgeted data for the year:

Division A Division B

Number of units transferred/sold 10,000 10,000

Materials costs $8 per unit $2 per unit

Other variable costs $2 per unit $3 per unit

Annual fixed costs $60,000 $30,000

Required: Calculate the budgeted annual profit of each profit centre and the organisation as a whole if the transfer price for components supplied by Division A to Division B is:

1. $20
2. $25