instructions:

the excel doc must be filled with the answers shown below:

(LO 15-2) 15-25. Evaluate Transfer Pricing System Southwest Division offers its product to outside markets for $30. It incurs variable costs of $11 per unit and fixed costs of $37,500 per month based on monthly production of 4,000 units. Northeast Division can acquire the product from an alternate supplier for $31 per unit or from Southwest Division for a transfer price of $30 plus $2 per unit in transportation costs. Required a. What are the costs and benefits of the alternatives available to Southwest Division and Northeast Division with respect to the transfer of Southwest Division's product? Assume that Southwest Division can market all that it can produce. How would your answer change if Southwest Division had idle capacity sufficient to cover all of Northeast Division's needs? b. D C Date: 12/20 Answer: Northeast Pays Southwest Receives Company Pays Transfer internally Pays Pays 9 10 11 12 Sell externally Pays Receives $ Pays 14 Pays $ Pays $ Optimal to sell: Select 19 20 Transfer internally Northeast Pays Southwest Receives $ Company Pays 22 23 Pays $ Pays 24 25 $ Pays Receives and Pays Pays 27 28 29 30 31 32 33 34 Sell externally Optimal to selt: Select Select Internally Externally