Need assistance with some Managerial Accounting Questions please, Data is given in the first picture
i Division data X Selling price for final product $ 310 Long-run average selling price for intermediate product 190 Incremental cost per unit for completion in Division B 145 Incremental cost per unit in Division A 115 The manager of Division B has made the following calculation: Selling price for final product $ 310 Transferred-in cost per unit (market) EA 190 Incremental cost per unit for completion 145 335 Contribution (loss) on product $ (25) Print DoneE Question Help O Mountaineer, Inc. has two divisions. A and B, which manufacture expensive bicycles. Division A produces the bicycle frame. and Division B assembles the rest of the bicycle onto the frame. There is a market for both the subassembly and the nal product. Each division has been designated as a prot centre. The transfer price for the subassembly has been set at the long-mn average market price. Assume that Division A's maximum capacity for this product is 1,600 units per month and sales to the intermediate market are now 1,120 units. The data available for each division are in the accompanying table. Click the icon to view the division data.) _ ired Requirement 1. Suppose the manager of Division A has the option of (a) cutting the external price to $185, with the certainty that sales will rise to 1,600 units or (b) maintaining the external price of $190 for the 1,120 units and transferring the 480 units to Division B at a price that would produce the same operating income for Division A. What transfer price would produce the same operating income for Division A? Is that price consistent with that recommended by the general guideline in the chapter so that the resulting decision would be desirable for the company as a whole? Begin by calculating the contribution difference if transfers are made to Division B when there is no unused capacity in Division A, under scenario (a) and (b). Select the formula you will use and enter the amounts. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for a negative contribution difference.) Contribution difference Contribution alternative (a) _ Contribution alternative (b) = between (a) and (b) Select the formula you will use to calculate the correct transfer price. (Round your answers to the nearest whole dollar.) Incremental cost per unit + Opportunity cost per unit = Minimum Transfer Price 1 1 5 + = Requirement 2a. Suppose that if the selling price for the intermediate product were dropped to $185, sales to external parties could be increased to 1,220 units. Division B wants to acquire as many as 460 units if the transfer price is acceptable. For simplicity, assume that there is no external market for the nal 380 units of Division A's capacity. Using the general guideline, what is (are) the minimum transfer prioe(s) that should lead to the correct economic decision? Ignore perfonnance-evaluation considerations. Choose the correct answer below. 0 A. 480 units should be transferred to Division B at a price of $262, (Q B. 480 units should be transferred to Division B at a price between $115 and $165. 0 C. 480 unis should not be transferred to Division B. O D. 460 units should be transferred to Division B at a price between $115 and $310. 0 E. 480 units should be transferred to Division B at a price of $145, Requirement 2b. Compare the total contributions under the alternatives to show why the transfer prioe(s) recommended lead(s) to the optimal economic decision. (Enter positive amounts only.) (a) Total contribution to sell 1,220 outside the company and transfer 380 to Division B (b) Total contribution to sell 1,120 outside the company and transfer 480 to Division B Total contribution difference in favour of option (b) v
