Determining Market-Based and Negotiated Transfer Prices Carreker, Inc, has a number of divisions, including the Alamosa Division, producer of surgical blades, and the Tavaris Division, a manufacturer of medical instruments. Aamosa Diviston produces a 2.6cm steel blade that can be used by Tavaris Division in the production of scalpeis. The market price of the Dade is 521 . Cost information for the blade is: Tovaris needs 20,000 units of the 2.6cm blade per year. Alamosa Division is at full capacity (80,000 unts of the blade). Required: 1. If Carreker, Inc, has a transfer pricing policy that requires transfer at market price, what would the transfer price be? per unit - Do you sugpose that Alamesa and Tirvaris divisons would choose to transfer at that price? 2. Now ruppole that Carreket, Inc;, allows negotated transfer pricing and that Alamosa Division can avold $1.65 of seiling and distribution expense by selling to Tovaris Division, Which division sets the minimum trander price, and what is it? Round your answers to the nearest cent, if needed. 5perunit Which divition sets the maximum transfer price, and what is it? per unit Do you buposse that Almosa and Tavaris divitions kyould thoose to transfer somewhere in the bargaking range? Round your answers to the nearest cent, if needed, ofer unit aris needs 20,000 units of the 2.6cm blade per year. Alamosa Division is at full capacity ( 80,000 units of the biace). equired: If Carreket, Inc, has a transfer pricing policy that requires transfer at market price, what would the transfer price be? per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer at that price? 2. Now suppose that Carreker, Inc, allows negotiated transfer pricing and that Alamosa Division can avold $1.65 of seling and distribution expense by selling to Tavaris Division. Which division sets the minimum transfer price, and what is it? Round your answers to the nearest cent, if needed. Which division sets the maximum transfer price, and what is it? per unit. Do you suppose that Namosa and Tevaris divisions would choose to transfer somewhere in the bargaining range? 3. What if Mamosa Division plans to produce and sell only 64,000 units of the 2.6cm biade next year? Which division sets the minimum transiec price, and what is it? Round your answers to the nearest cent, if needed. per unit. Which Givision sets the mavimum transfer price, and what is it? per unit Do you woppose that Alamost and Tavaris divisions would choose to transfer somewhere in the bargaining ranget
