Ford Motor Company has two divisions, the Frame Division and the Assembly Division. The company is a highly decentralized company. Each division manager has full authority for sourcing decisions. The Frame Division produces the frame for the cars and the Assembly Division produces the cars. The Frame Division can either sell to the Assembly Division or sell to outside customers. There is a market for the frames as well as the cars. Each of the divisions has been designated as a profit center. The following data is available for each division.

Frame Division: Selling (market) price for the frame........................................ $2,100 Incremental cost per unit in the Frame Division.................. $1,500 Assembly Division: Selling (market) price for the cars........................................ $6,500 Incremental cost per unit in the Assembly Division.................. $4,500 The Frame Division has the capacity to produce 5,000 units a year.

Assuming there is no excess capacity, what would be the minimum transfer price that the Frame Division should accept and the maximum transfer price that the Assembly Division should accept?

Group of answer choices

$1,500 and $2,000 respectively

$600 and $4,500 respectively

$2,100 and $2,000 respectively

$600 and $2,000 respectively

Refer to the previous question. Assume the Frame Division is only producing 4,000 units per year. What would be the minimum transfer price that the Frame Division should accept and the maximum transfer price the Assembly Division should accept for a transfer of 1,000 units?

Group of answer choices

$2,100 and $2,000 respectively

$600 and $2,000 respectively

$600 and $4,500 respectively

$1,500 and $2,000 respectively

Refer to the previous two questions. Assuming the Frame Division is only selling 4,000 units per year and that 1,000 units are produced and transferred to the Assembly Division. The sale of those 1,000 units by the Assembly Division would result in:

Group of answer choices

An increase in company profits of $2,000,000.

An increase in company profits of $4,400,000.

An increase in company profits of $500,000.

A decrease in company profits of $100,000