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Andherry Co. has Divisie A at manufactures and sells munder of pan inching Put XYZ Dus coceming Put XYZp Capacity in Selling price to outside
Andherry Co. has Divisie A at manufactures and sells munder of pan inching Put XYZ Dus coceming Put XYZp Capacity in Selling price to outside customers Fixed cost per unit (based on capacity) 70,000 1010 875 25 The company has Division B that could use Pan XYZ in one of in products. Division B is currently purchasing 15.000 ut Put XYZ per year from overseas soppler 10 per part Required: a. Assume that Division A is selling all of Part XYZ it can produce to outside customers. What is the acceptable range, if any, for the transfer price baween the two divisions 14 marks) b. Assume again that Division A is selling all of Part XYZ it can produce to outside customers. Also assume that $3 in variable expenses can be avoided on transfers within the company due to reduced shipping and selling costs. What is the acceptable range, if any, for the transfer price between the two divisions? [4 marks] c. Based on requirement (a), assume Division A offers to sell 15,000 units to Division B for $125 and that Division B refuses this price. What will be the loss in potential profits for Division A? [2 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac) BUS Paragraph Arial 100t A
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