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Exercise 15-25 Evaluate Transfer Pricing System (LO 15-2,3) Carmen Seville and Don Turco jointly own Bright Green Temp Services (BGTS). Carmen owns 63 percent and

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Exercise 15-25 Evaluate Transfer Pricing System (LO 15-2,3) Carmen Seville and Don Turco jointly own Bright Green Temp Services (BGTS). Carmen owns 63 percent and Don owns 37 percent. The company provides aporary clerical services at awe of 543 per hour During the past year, its clients used 17.000 hours of temporary services Big City Developers purchased 3.100 hours of temporary services from BGTS last year. Carmen has a 23 percent interest in Big City Developers, and Don has a 63 percent interest in it. At the end of the year, Don suggested that BGTS give Big City Developers a 10 percent reduction in the hourly rate charged next year in recognition of its large purchases and desirability as a cient Required: Assuming that Big City Developers purchases the same number of hours and that all other costs and activities remain the same in the coming your what effect would the price reduction have on BTS's operating profits that accrue to Carmen and to Don for the coming year? (Decrease in profits should be indicated by minus sign wherever appropriate.) Total Ms. Seville Mr. Turco's Shares (63% Shares (37% and 25%) and 6) Decrease in profits at BGTS Increase in profits at Big Cly Developers Net change in profits

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