In each of the cases below, assume that Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits: Division Xi Capacity in units Number of units being sold to outside customers Selling price per unit to outside customers Variable costs per unit Fixed costs per unit (based on capacity) Division Ye Number of units needed for production Purchase price per unit now being paid to an outside supplier Required: Case 230,000 230,000 230,000 205,000 $ 63 $ 46 $ 36 $ 27 $ 12 $ 10 $ 25,000 25,000 58 $ 45 1. Refer to the data in case A above. Assume that $4 per unit in variable selling costs can be avoided on intracompany sales. Determine the minimum transfer price that the selling division is willing to accept. Transfer price 2. Refer to the data in case B above. In this case there will be no reduction in variable selling costs on intracompany sales. What is the range of transfer price the managers of both divisions should agree? The transfer price can be a lowest of and a highest of