Hello Please answer these questions for me please in detail. I am most interested in question #1 though please spend most of your time on that question but as much details as can get on other ones will help me a lot. I need to know the transfer price that is best ROI and why for both investment centers. someone said $1.90 because it is above variable $1.75 cost of backing so they make money and lower than the $2.00 Tufting current cost so Tufting makes more money and why would Tufting accept $2 if already getting at $2 but same company owns them so not sure that matters. And someone else said its $2.00 because that is the best ROI because that is the price Tufting is already paying and because Backing division cannot use the cost as transfer price as it will affect ROI. Please tell me the best transfer price that makes best ROI for both investment center divisions and explain why for me please in detail so I can better understand. Thank you!!!

AutoSave (C O#) P.Mercer Project 5 - Saved . Search Ber Mercer X File Home Insert Page Layout Formulas Data Review View Help Share Comments K Cut Arial 12 - A" A" 29 Wrap Text General _ AutoSum AT O Paste [a Copy BIU- -MAY BE Merge & Center y Conditional Format as Cell Insert Delete Format +Fill Sort & Find & Ideas Format Painter Formatting * lable " Styles Clear* Filter * Select Clipboard Font Alignment Number Cells Editing doas A13 X y fx A Insert Function B C D E G H J K L 1 Part 3 2 Rug, Inc. has acquired a new backing division that produces rubber backing, which it sells for $2.20 per square yard. Sales are about 1,200,000 square yards per year. 3 Since the Backing Division has a capacity of 2.090,000 square yards per year, top management is thinking that it might be wise for the company's Tufting Division to start purchasing from the newly acquired Backir The Tufting Division now purchases 600,000 square yards per year from an outside supplier at a price of $2 per square yard. The current price is lower than the competitive $2.20 price as a result of the large disc 5 Direct materials $1.20 6 Direct Labor 0.3 7 Variable overhead 0.25 6 Fixed overhead (1,200,000 level) 0.1 9 Total cost $1.85 10 11 Required: 12 1. If both divisions are to be treated as investment centers and their performance evaluated by the ROI formula, what transfer price would you recommend that would benefit each division? Why? 13 14 15 16 2. Determine the effect on corporate profits of making the backing. Make sure you show your calculations. 14 19 20 21 22 23 3. Based on your transfer price, would you expect the ROI in the Backing Division to increase, decrease, or remain unchanged? Explain. 24 25 26 4. What would be the effect on the ROI of the Tufting Division using your transfer price? Explain. 27 OverviewProject5 | Part 1 | Part2 Part 3 1009 Type here to search e P W 1 1:20 PM 8/6/2020