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Birrell Scientific Inc, manufactures electronic products, with two operating divisions, the Gps Systems and Communication Systems divisions. Condensed divisional Income statements, which involve no intracompany

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Birrell Scientific Inc, manufactures electronic products, with two operating divisions, the Gps Systems and Communication Systems divisions. Condensed divisional Income statements, which involve no intracompany transfers and which include a breakdown of expenses into variable and fixed components, are as follows: Systems Divislon. "\$60 of the $90 per unit represents materlals costs, and the remaining $30 per unit represents other varlable conversion expenses incurred within the Communication Systems Division. The GPS Systems Division is presently producing 90,000 units out of a total capacity of 150,000 units. Materials used in produeing the Communication 5 ystems Division's product are currently purchased from outside suppliers at a price of $60 per unit. The GPS Systems Division is able to produce the materiais used by the Communication Systems Division at a variable cost of $40 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 $60 per unit be an approperate transfer price for Birrell Scientific Inc.? 2. If the Communication Systems Division purchases 25,000 units from the cps 5y stems Division, rather than externally, at a negotiated transfer price of $52 per unit, 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 Brrell Scientific inc's total operating income would increase by 3. Prepare condensed divisional income statements for Birrell Scientific Inc. based on the data in part (2). 4. If a transfer price of $49 per unit is negotiated, how much would the operating income of esch division and the total company operating income increase? The GpS:Systems Divition's operating income would increase by The Communication Systems Divisson's operating income would increase by Dirrell Scientific Scientific Incis total operating income would increase by 5a. What is the range of potsbie fegotiated transfer. prices that would be acceptable for Birreli Scientific tec.? Between 1 and 1 5b. Assuming that the manogers of the two fivisisns cannot agre on a transfef price, what transfer price would reoreisent the best combromisel If requind, round Your antwer to the nespect doliak

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