Inapster Pricing Barrel Santic Inconfuctures electronic products, with two operating divisions, the GPS System and Communication Systems divisions Condensed divisional income statements, which involve no intracompany transfers and which include a breakdown of expenses into variabled freed components, are as follows: Birrell Scientific Inc Divisional Income Statements For the Year Ended December 31, 2015 Communication GPS Systems Systems Division Division Total 80,000 units $60 per unit $4,800,000 $4,000,000 150,000 units $115 per unit $17,250,000 17,250,000 $4,800,000 $17,250,000 $22,050,000 Expenses Variable: 80.000 units 543 per unit $13.440,000) $(3.440,000) 150,000 units 390 per unit $(13,500,000) (13,500,000) Fixed 250,000 (525,000) (775,000) Total expenses $(3,690,000) 5(14,025,000) ${17.715,000) Operating income $1,110,000 $3,225,000 54,335,000 *$60 of the $90 per unit represents materials costs, and the remaining 530 perunt represents other variable conversion expenses incurred within the Communication Systems Division The GPS Systems Division is presently producing 80,000 units out of a total capacity of 150,000 units. Materials used in producing the Communication Systems Division's product are currently purchased from outside suppliers at a prion of $60 per unit. The GPS Systems Division is able to produce the materials used by the Communication Systems Division at a variable cost of 543 per unit. Except for the possible transfer of materials between divisions, no changes are expected in sales and expenses. Required: 1. Would the market price of $60 per unit be an appropriate transfer price for Burrell Scientific Inc. 2. If the Communication Systems Division purchases 25,000 units from the GPS Systems Division, rather than externally, a negotiated transfer price of 552 per unit, how much would the operating income of each division and the total company operating income increase? The GPS Systems Chico's operating income would increase by The Communication Systems Division's operating come would incremet thirrell Scientific Inc.'s total operating come would increase by CheckMW 3. Prepare condensed divisional income statements for Birrell Scientific Inc. based on the data in part (2). Birrell Scientific, Inc. Divisional Income Statements For the Year Ended December 31, 2015 GPS Division Communication Division Total Sales: 80,000 units 25,000 units 150,000 units Expenses: Variable: 105,000 units 25,000 units 125,000 units Fixed Total expenses Operating income Feedback Check My Work 3. Keep in mind, 25,000 units are transferred in at $52 per unit plus $38 in other variable conversion expenses incurred within the division. 4. If a transfer price of $49 per unit is negotiated, how much would the operating income of each division and the total company operating income increase? The GPS Systems Division's operating income would increase by The Communication Systems Division's operating income would increase by Birell Scientific Scientific Inc.'s total operating income would increase by 5. What is the range of possible negotiated transfer prices that would be acceptable for Burrell Scientific Inc.? Between od Sh. Asuming that the managers of the two division cannot agree on a trarades pnce, what afer price would represent the best compromise if required, round your answer to the nearest dollar 532 Inapster Pricing Barrel Santic Inconfuctures electronic products, with two operating divisions, the GPS System and Communication Systems divisions Condensed divisional income statements, which involve no intracompany transfers and which include a breakdown of expenses into variabled freed components, are as follows: Birrell Scientific Inc Divisional Income Statements For the Year Ended December 31, 2015 Communication GPS Systems Systems Division Division Total 80,000 units $60 per unit $4,800,000 $4,000,000 150,000 units $115 per unit $17,250,000 17,250,000 $4,800,000 $17,250,000 $22,050,000 Expenses Variable: 80.000 units 543 per unit $13.440,000) $(3.440,000) 150,000 units 390 per unit $(13,500,000) (13,500,000) Fixed 250,000 (525,000) (775,000) Total expenses $(3,690,000) 5(14,025,000) ${17.715,000) Operating income $1,110,000 $3,225,000 54,335,000 *$60 of the $90 per unit represents materials costs, and the remaining 530 perunt represents other variable conversion expenses incurred within the Communication Systems Division The GPS Systems Division is presently producing 80,000 units out of a total capacity of 150,000 units. Materials used in producing the Communication Systems Division's product are currently purchased from outside suppliers at a prion of $60 per unit. The GPS Systems Division is able to produce the materials used by the Communication Systems Division at a variable cost of 543 per unit. Except for the possible transfer of materials between divisions, no changes are expected in sales and expenses. Required: 1. Would the market price of $60 per unit be an appropriate transfer price for Burrell Scientific Inc. 2. If the Communication Systems Division purchases 25,000 units from the GPS Systems Division, rather than externally, a negotiated transfer price of 552 per unit, how much would the operating income of each division and the total company operating income increase? The GPS Systems Chico's operating income would increase by The Communication Systems Division's operating come would incremet thirrell Scientific Inc.'s total operating come would increase by CheckMW 3. Prepare condensed divisional income statements for Birrell Scientific Inc. based on the data in part (2). Birrell Scientific, Inc. Divisional Income Statements For the Year Ended December 31, 2015 GPS Division Communication Division Total Sales: 80,000 units 25,000 units 150,000 units Expenses: Variable: 105,000 units 25,000 units 125,000 units Fixed Total expenses Operating income Feedback Check My Work 3. Keep in mind, 25,000 units are transferred in at $52 per unit plus $38 in other variable conversion expenses incurred within the division. 4. If a transfer price of $49 per unit is negotiated, how much would the operating income of each division and the total company operating income increase? The GPS Systems Division's operating income would increase by The Communication Systems Division's operating income would increase by Birell Scientific Scientific Inc.'s total operating income would increase by 5. What is the range of possible negotiated transfer prices that would be acceptable for Burrell Scientific Inc.? Between od Sh. Asuming that the managers of the two division cannot agree on a trarades pnce, what afer price would represent the best compromise if required, round your answer to the nearest dollar 532