In Cases 1 to 3 below, assume that Division A has a product that can be sold either to Division B of the same company or to outside customers. The managers of both divisions are evaluated based on their own division's ROI. The managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated. Treat each case independently: Case 4. Division A: Capacity in units Number of units now being sold to outside 50,000 300,000 100,000 200,000 200,000 45 30 6 customers 50,000 $ 100 $ $63 $ $25 $ 300,000 75,000 Selling price per unit to outside customers Variable costs per unit 40 $ 19 $ 60 $ 35 $ 17 $ Fixed costs per unit (based on capacity) Division B Number of units needed annually Purchase price now being paid to an outside 10,000 70,000 20,000 60,000 supplier $92$ 39 $ 60* Before any purchase discount. Required: 3. Refer to Case 3. Assume that Division B is now receiving a 5% price discount from the outside supplier a-2. What is the range of transfer price the manager's of both divisions should agree? e transfer price can be a lowest of and a highest of a-3. It is assumed that managers are co-operative and understand their own business, will the managers agree to a transfer? Yes