David Inc. is an electronic manufacturing plant which has three divisions as follows: Division 1, Division 2, Division 3. Division l's products can be transferred to Division 2 for further processing or can be sold externally. Division 2's products can be transferred to Division 3 for further processing or can be sold externally. Data regarding all three divisions for the last month are presented as follows: Division 1 Division 2 Division 3 Capacity per month (units) 3,000 4,000 4,500 Selling price per unit $100 $200 $250 Variable cost per unit $60 $90 $125 Fixed costs for the month for the division ($) $84,000 $368,000 $450,000 | Total demand per month for the divisions (units) 3,000 3200 3600 Required a. Calculate the minimum transfer prices for Divisions 1 and 2 based on current demand and current capacity for each division. b. Calculate the minimum special price per unit that would be charged by each of the three divisions for a special order of 100 units of their products. c. Calculate the minimum special price per unit that would be charged by each of the three divisions for a special order of 1,000 units of their products. d. What would be the maximum price per unit that David Inc would pay to outsource (buy) 3,000 units of Division 1 products from an outside supplier? Assume fixed costs remain unchanged and that the products would be sold to its current customers. NO Sub-question 32 What is the minimum transfer price per unit for Division 1's products based on its current demand and capacity? 33 What is the minimum transfer price per unit for Division 2's products based on its current demand and capacity? 34 What would be the minimum special price per unit that Division 1 should charge for a special order for 100 units of their products? 35 What would be the minimum special price per unit that Division 2 should charge for a special order for 100 units of their products? 36 What would be the minimum special price per unit that Division 3 should charge for a special order for 100 units of their products? 37 What would be the minimum special price per unit that Division 1 should charge for a special order for 1,000 units of their products? 38 What would be the minimum special price per unit that Division 2 should charge for a special order for 1,000 units of their products? 39 What would be the minimum special price per unit that Division 3 should charge for a special order for 1,000 units of their products? 40 What would be the maximum price per unit that David Inc would pay to outsource (buy) 3,000 units of Division 1 products from an outside supplier? Assume fixed costs remain unchanged and that the products would be sold to its current customers
