Exercise $22-19($Algo$)$ Determining transfer prices LO C$1$

The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a

market price of $$92$ each. Each trailer incurs $$46$ of variable manufacturing costs. The Trailer division has capacity for $26,000$ trailers

per year and has fixed costs of $$600,000$ per year.

Assume the Assembly division of Baxter Bicycles wants to buy $5,200$ trailers per year from the Trailer division. If the Trailer

division can sell all of the trailers it manufactures to outside customers $($and has no excess capacity$),$ what price should be used

on transfers between divisions?

Assume the Trailer division currently only sells $9,200$ trailers to outside customers and has excess capacity. The Assembly

division wants to buy $5,200$ trailers per year from the Trailer division. What is the range of acceptable prices on transfers

between divisions?

Transfer price per trailer

Transfer price per trailer will be at least

but not more than