Monty Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $ 10 from an outside vendor. Division A needs 9,800 lamps for the coming year. Division B has the capacity to manufacture 49,000 lamps annually. Sales to outside customers are estimated at 39,200 lamps for the next year. Reading lamps are sold at $ 12 each. Variable costs are $ 7 per lamp and include $ 2 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $ 78,400. Consider the following independent situations.

(a)

What should be the minimum transfer price accepted by Division B for the 9,800 lamps and the maximum transfer price paid by Division A?

Minimum transfer price accepted by Division B		$ enter a dollar amount per unit per unit
Maximum transfer price paid by Division A		$ enter a dollar amount per unit per unit

(b)

Suppose Division B could use the excess capacity to produce and sell externally 14,700 units of a new product at a unit selling price of $ 7. The unit variable cost for this new product is $ 5. What should be the minimum transfer price accepted by Division B for the 9,800 lamps and the maximum transfer price paid by Division A?

Minimum transfer price accepted by Division B		$ enter a dollar amount per unit per unit
Maximum transfer price paid by Division A		$ enter a dollar amount per unit per unit

(c)

If Division A needs 12,250 lamps instead of 9,800 during the next year, what should be the minimum transfer price accepted by Division B and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, e.g. 10.50.)

Minimum transfer price accepted by Division B		$ enter a dollar amount per unit rounded to 2 decimal places per unit
Maximum transfer price paid by Division A		$ enter a dollar amount per unit rounded to 2 decimal places per unit