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Birrell Scientific Inc. manufactures electronic products, with two operating divisions, GPS Systems and Communication Systems Condensed divisional income statements, which involve no intracompany transfers and which include a breakdown of expenses into variable and fixed components, are as follows: BIRRELL SCIENTIFIC INC. Divisional Income Statements For the Year Ended July 31, 2015 Communication GPS Systems Systems Division Division Total Sales 400,000 units $72 per unit $ 28,800,000 $ 28,800.000 100,000 units $132 per unit $ 13,200,000 13,200,000 $ 28,800,000 $13,200,000 $ 42,000,000 Expenses: Variable: 400,000 units $50 per unit $120,000,000) S[20,000,000) 100,000 units $110" per unit $(11,000,000) (11,000,000) Fixed (5,000,000) (1,000,000) (6,000,000) Total expenses 25,000,000) 5(12,000,000) $137,000,000) Operating income $ 3,800,000 $ 1,200,000 $5,000,000 * $70 of the $110 per unit represents materials costs, and the remaining $40 per unit represents other variable conversion expenses incurred within the Communication Systems Division The GPS Systems Division is presently producing 400.000 units out of a total capacity of 550,000 units. Materials used in producing the Communication Systems Division's product are currently purchased from outside $70 of the $110 per unit represents materials costs, and the remaining $40 per unit represents other variable conversion expenses incurred within the Communication Systems Division The GPS Systems Division is presently producing 400,000 units out of a total capacity of 550,000 units. Materials used in producing the Communication Systems Division's product are currently purchased from ou suppliers at a price of $70 per unit. The GPS Systems Division is able to produce the materials used by the Communication Systems Division at a variable cost of $50 per unit. Except for the possible transfer of materials between divisions, no changes are expected in sales and expenses. Required: 1. Would the market price of $70 per unit be an appropriate transfer price for Birrell Scientific Inc.? Yes 2. If the Communication Systems Division purchases 100,000 units from the GPS Systems Division, rather than externally, at a negotiated transfer price of $58 per unit, how much would the operating come of each division and the total company operating income increase? The GPS Systems Division's operating income would increase by The Communication Systems Division's operating income would increase by Birrell Scientific Inc.'s total operating income would increase by 3. Prepare condensed divisional income statements for Birell Scientific Inc. based on the data in part (2) Birrell Scientifie Inc Divisional Income Statements For the Year Ended December 31, 2045 GPS Division Communication Division Total Sales: 400,000 units Birrell Scientific Inc Divisional Income Statements For the Year Ended December 31, 2015 GPS Division Communication Division Total Sales: 400,000 units 100,000 units 100,000 units Expenses Variable 500,000 units 100,000 units 100,000 units Fixed Total expenses Operating income 4. If a transfer price of $64 per unit is negotiated, how much would the operating income of each division and the total company operating income increase? The GPS Systems Division's operating income would increase by The Communication Systems Division's operating income would increase by Birell Scientific Scientific inc's total operating income would increase by Total expenses Operating income 4. If a transfer price of $64 per unit is negotiated, how much would the operating income of each division and the total company operating income increase? The GPS Systems Division's operating income would increase by The Communication Systems Division's operating income would increase by Birrell Scientific Scientific Inc.'s total operating income would increase by 5a. What is the range of possible negotiated transfer prices that would be acceptable for Birrell Scientific Inc.? Between $ and Sb. Assuming that the managers of the two divisions cannot agree on a transfer price, what price would you suggest as the transfer price? Check My Work 5 more Check My Work uses remaining, Birrell Scientific Inc. manufactures electronic products, with two operating divisions, GPS Systems and Communication Systems Condensed divisional income statements, which involve no intracompany transfers and which include a breakdown of expenses into variable and fixed components, are as follows: BIRRELL SCIENTIFIC INC. Divisional Income Statements For the Year Ended July 31, 2015 Communication GPS Systems Systems Division Division Total Sales 400,000 units $72 per unit $ 28,800,000 $ 28,800.000 100,000 units $132 per unit $ 13,200,000 13,200,000 $ 28,800,000 $13,200,000 $ 42,000,000 Expenses: Variable: 400,000 units $50 per unit $120,000,000) S[20,000,000) 100,000 units $110" per unit $(11,000,000) (11,000,000) Fixed (5,000,000) (1,000,000) (6,000,000) Total expenses 25,000,000) 5(12,000,000) $137,000,000) Operating income $ 3,800,000 $ 1,200,000 $5,000,000 * $70 of the $110 per unit represents materials costs, and the remaining $40 per unit represents other variable conversion expenses incurred within the Communication Systems Division The GPS Systems Division is presently producing 400.000 units out of a total capacity of 550,000 units. Materials used in producing the Communication Systems Division's product are currently purchased from outside $70 of the $110 per unit represents materials costs, and the remaining $40 per unit represents other variable conversion expenses incurred within the Communication Systems Division The GPS Systems Division is presently producing 400,000 units out of a total capacity of 550,000 units. Materials used in producing the Communication Systems Division's product are currently purchased from ou suppliers at a price of $70 per unit. The GPS Systems Division is able to produce the materials used by the Communication Systems Division at a variable cost of $50 per unit. Except for the possible transfer of materials between divisions, no changes are expected in sales and expenses. Required: 1. Would the market price of $70 per unit be an appropriate transfer price for Birrell Scientific Inc.? Yes 2. If the Communication Systems Division purchases 100,000 units from the GPS Systems Division, rather than externally, at a negotiated transfer price of $58 per unit, how much would the operating come of each division and the total company operating income increase? The GPS Systems Division's operating income would increase by The Communication Systems Division's operating income would increase by Birrell Scientific Inc.'s total operating income would increase by 3. Prepare condensed divisional income statements for Birell Scientific Inc. based on the data in part (2) Birrell Scientifie Inc Divisional Income Statements For the Year Ended December 31, 2045 GPS Division Communication Division Total Sales: 400,000 units Birrell Scientific Inc Divisional Income Statements For the Year Ended December 31, 2015 GPS Division Communication Division Total Sales: 400,000 units 100,000 units 100,000 units Expenses Variable 500,000 units 100,000 units 100,000 units Fixed Total expenses Operating income 4. If a transfer price of $64 per unit is negotiated, how much would the operating income of each division and the total company operating income increase? The GPS Systems Division's operating income would increase by The Communication Systems Division's operating income would increase by Birell Scientific Scientific inc's total operating income would increase by Total expenses Operating income 4. If a transfer price of $64 per unit is negotiated, how much would the operating income of each division and the total company operating income increase? The GPS Systems Division's operating income would increase by The Communication Systems Division's operating income would increase by Birrell Scientific Scientific Inc.'s total operating income would increase by 5a. What is the range of possible negotiated transfer prices that would be acceptable for Birrell Scientific Inc.? Between $ and Sb. Assuming that the managers of the two divisions cannot agree on a transfer price, what price would you suggest as the transfer price? Check My Work 5 more Check My Work uses remaining