Division L at Reiner Ltd. manufactures 17686 units of part #70, which it currently sells to outside customers. Selected data for part #70 are given below:

Unit selling price to outside customers	$90.81
Variable production cost per unit	57.70
Variable selling and administrative expense per unit	11.22
Total fixed production cost (based on a capacity of 19091 units per year)	$380000

Division K at Reiner Ltd. currently purchases 7621 units of part #70 from an outside supplier at a price of $85.91. Consideration is being given to buying internally rather than from the outside supplier. If an internal transfer takes place, it has been determined that variable S&A expense would be cut by one quarter for any sales made to Division K.

Assume the two divisions agree on a transfer price of $79.01. What is the incremental income to division L if a transfer takes place?

Select one:

a. $-37795

b. $67517

c. $-59172

d. $52585

Division A has the capacity for making 2820 motors per month and regularly sells 1929 motors each month on the intermediate market at a contribution margin of $63.46 per motor. A sister division, Division B, would like to obtain 1403 motors each month from Division A. In computing a transfer price per motor using the transfer pricing formula, the lost contribution margin per unit portion of the transfer price computation would be:

Select one:

a. $63.46

b. $34.74

c. $46.32

d. $23.16