Homework: Chapter 23-HW-F 20 Save Score: 0 of 1 pt 1 of 4 (0 complete) HW Score: 0%, 0 of 4 pts E23-19 (book/static) A Question Help O Jose Martinez is the CEO of Shakelt, a producer of premium ice cream. Shakelt has two divisions, the supplying division and the processing division. (Click the icon to view the additional information regarding the divisions.) Read the requirements Requirement 1. What is the profit for the supplying division of supplying 10 gallons of milk to the processing division under Jose's transfer pricing system? Do you think that the transfer pricing system incentivizes the managers of the supplying division to work hard, as Jose intends? What is the profit for the supplying division of supplying 10 gallons of milk to the processing division under Jose's transfer pricing system? Select the formula and enter the amounts to calculate the profit for the supplying division. (Complete all input fields. Enter a 0 for any zero balances.) Profit for the supplying division Requirements More Info - X 1. What is the profit for the supplying division of supplying 10 gallons of milk to processing division under Jose's transfer pricing system? Do you think that the transfer pricing system incentivizes the managers of the supplying division to work hard, as Jose intends? 2. In the back of Jose's mind is that one of the larger competitors may be interested in buying only one of the divisions, and not his entire company. He is patting himself on the back for choosing the transfer pricing system since, in his view, it makes the profitability of each of the two divisions look very good. Do you agree with Jose? The supplying division supplies milk, the main ingredient, to the processing division. Jose is an ambitious entrepreneur, and he is hoping to soon sell Shakelt, which is a private company, to one of the larger competitors. The supplying division buys milk from local farmers for 55 per 10 gallons, and incurs $1 of variable costs per 10 gallons transported to the processing division (the supplying division doesn't incur any material fixed costs). The processing division could buy milk of the same high quality for 58 Por gallons on the outside market. Jose is trying to "whip his company into shape" by implementing a transfer pricing system that he views as providing very strong incentives for the two divisions to work hard: The supplying division will get reimbursed for its incremental costs of supplying the milk to the processing division; the processing division is charged the price that it would have to pay on the open market. Print Done Print Done Choose from any list or enter any number in the input fields and then click Check Answer. parts - remaining Clear All Check