Division Details:

• Division X (Manufacturing):
  • Variable Costs: $500,000
  • Fixed Costs: $250,000
  • Production Capacity: 20,000 units

• Division Y (Sales):
  • Variable Costs: $400,000
  • Fixed Costs: $200,000
  • Demand: 18,000 units

Requirements:

• Determine the transfer price per unit for Division Y to acquire products from Division X using the negotiated price method.
• Evaluate the impact on the overall profitability of the company.
• Present the transfer pricing calculations in a detailed table.
• Discuss the benefits and challenges of the chosen transfer pricing method.