he management accounts rices nize the transfer price so Producing division gets a profit of $4 ofits of the whole firm . Calculation: $12 (revenue from retailing) minus $8 cost Retailing division makes $18-$12 (its cost) = $6 TAXIMUM 10 INIMUM ke no immediate Let's look at another example mpany profit Grocery Storehouse Inc owns both West Coast the transfer price affect Plantations (producing) and Grocery Mart (retailing). will be shown by the Here is some information on both divisions:- $10 $12 $14 $16 $18 $20 West Coast Plantations, Fresno: (wants to sell oranges) Navel orange harvest capacity per month 10,000 crates ices $2 $4 $6 $8 $10 $12 Variable cost per crate of navel oranges 10 per crate $8 $6 $4 $2 50 -$2 Fixed costs per month 100,000 ales) $10 $10 $10 $10 $10 $10 External selling price of navel oranges $ 25 per crate Grocery Mart, Long Beach: (wants to buy oranges) External purchase price of navel oranges $ 20 per crate Monthly sales of navel oranges 1,000 crates XIMUM 12 JIMUM 2 Quick Check Quick Check West Coast Plantations (Seller) Due to a new order(!), West Coast Plantations . Capacity. 10,000 crates can now sell 9,500 crates in the outside market " Variable cost: $10 per crate . Can sell 9,500 crates in the outside market at $25 at $25. What is the minimum and maximum Grocery Mart (Buyer) feasible transfer price (TP) for the 1000 crate . Wants to buy 1,000 crates (all or nothing) order between the divisions? Can get Oranges itself for $20 per crate What is the minimum and maximum feasible transfer price Min TP Max TP (TP) for the 1,000 crate order? a $25 $20 (no possible deal) Min TP Max TP $10 $20 $25 $20 (no possible deal) po $20 C . $10 $25 $10 d $17.50 $20 $10 $25 $17.50 $20 17 18