Murray company produces telecommunications equipment A$380$ at its Toledo Division and can either exports the products to its Austria Division or sell them locally. Following details are given:

Var. cost per unit of A$380$ $$350$

Full Mfg$.$ Cost per unit $$500($at a production level of $2,000)$

Selling price in Austria $$750$

Selling price in U$.$S$.$ $$650$

Shipping costs to Austria $($incurred by Toledo Division$)$ $$20$

Assume that there are no var. costs for Austria Division

Tax rate in the U$.$S$.40\%$

Tax rate in Austria $20\%$

Transfer price allowed by authorities $$500-$ $$700$

Production capacity at Toledo $2000$ units

Max. Demand $2000$ units in U$.$S$.$ and $1000$ units in Austria

$1.$ Assume no taxes and no restriction on transfer prices. Would you recommend exports to Austria? If so$,$ suggest a transfer price $($or a range$)$ on the exports to Austria.

$2.$ Assume no taxes and no restriction on transfer prices. Calculate the income for Murray Company as a whole and for the individual divisions based on the transfer price in part $1.$

$3.$ Now assume taxes and restriction on transfer prices. Under this scenario, is it worthwhile to export? If so$,$ at what transfer price would you export? Show income calculations for the company as a whole and for the individual divisions.

$4.$ Are the transfer prices in parts $1$ and $3$ the same? If not, explain why.