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Selling price for final product 380 Long-run average selling price for intermediate product 300 Incremental cost per unit for completion in division B 190 Incremental cost per unit in division A 90 The manager of division B has made the following calculation: Selling price for final product S 380 Transferred-in cost per unit (market) S 300 Incremental cost per unit for completion 190 490 Contribution (loss) on product (1101. Should transfers be made to division B if there is no unused capacity in division A? Is the market price the correct transfer price? Show your computations. 2. Assume that division A's maximum capacity for this product is 1,700 units per month and sales to the intermediate market are now 1,360 units. Should 340 units be transferred to division B? At what transfer price? Assume that for a variety of reasons, division A will maintain the $300 selling price indefinitely. That is, division A is not considering lowering the price to outsiders even if idle capacity exists. 3. Suppose division A quoted a transfer price of $190 for up to 340 units. What would be the contribution to the company as a whole if a transfer were made? As manager of division B, would you be inclined to buy at $190? Explain. 4. Suppose the manager of division A has the option of (a) cutting the external price to $292, with the certainty that sales will rise to 1,700 units, or (b) maintaining the external price of $300 for the 1,360 units and transferring the 340 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 so that the resulting decision would be desirable for the company as a whole?Mountaineer, Inc., has two divisions, A and B, that 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 final product. Each division has been designated as a profit center. The transfer price for the subassembly has been set at the long-run average market price. The following data are available for each division: (Click to view the data.) Read the requirements. Requirement 1. Should transfers be made to division B if there is no unused capacity in division A? Is the market price the correct transfer price? Show your computations. Begin by calculating the gain or loss if transfers are made to division B when there is no unused capacity in division A. Select the formula you will use and enter the amounts. (Use parentheses or a minus sign for a loss.) Gain (loss) from transfer Should transfers be made to division B if there is no unused capacity in division A? Select the formula you will use to calculate the correct transfer price. Minimum transfer price Is the market price the correct transfer price? Requirement 2. Assume that division A's maximum capacity for this product is 1,700 units per month and sales to the intermediate market are now 1,360 units. Assume that for a variety of reasons, division A will maintain the $300 selling price indefinitely. That is, division A is not considering lowering the price to outsiders even if idle capacity exists. Should 340 units be transferred to division B? At what transfer price?Requirement 2. Assume that division A's maximum capacity for this product is 1,700 units per month and sales to the intermediate market are now 1,360 units. Assume that for a variety of reasons, division A will maintain the $300 selling price indefinitely. That is, division A is not considering lowering the price to outsiders even if idle capacity exists. Should 340 units be transferred to division B? At what transfer price? Yes, 340 units should be transferred to division B at a price of $380 hat would be the contribution to the company as a whole if a transfer were made? As manager of division B, would you be inclined to buy at $190? Yes, 340 units should be transferred to division B at a price of $300. Yes, 340 units should be transferred to division B at a price between $90 and $190. it. Yes, 340 units should be transferred to division B at a price between $90 and $380. gin to division B. (Use parentheses or a minus sign for a loss. For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.) No, 340 units should not be transferred to division B.Requirement 3. Suppose division A quoted a transfer price of $190 for up to 340 units. What would be the contribution to the company as a whole if a transfer were made? As manager of division B, would you be inclined to buy at $190? Explain. The contribution to the company as a whole if a transfer were made would be $ per unit. Complete the table below using the transfer price of $190 to compute the contribution margin to division B. (Use parentheses or a minus sign for a loss. For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.) Selling price for final product Transferred-in cost per unit (market) Incremental cost per unit for completion Contribution margin (loss) on product As manager of division B, would you be inclined to buy at $190? ) $292, with the certainty that sales will rise to 1,700 units, or (b) maintaining the external price of $300 for the 1,360 units and transferring the Yes, they are making a profit and therefore this will benefit their division. transfer price would produce the same operating income for division A? Is that price consistent with that recommended by the general No, division B has $0 contribution at the $190 price and would have little incentive to buy. No, they will have a loss and the division will not accept operating at a loss.Requirement 4. Suppose the manager of division A has the option of (a) cutting the external price to $292, with the certainty that sales will rise to 1,700 units, or (b) maintaining the external price of $300 for the 1,360 units and transferring the 340 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 so that the resulting decision would be desirable for the company as a whole? Select the formula to calculate the minimum transfer price, then calculate the minimum transfer price. + Minimum transfer price Incremental cost per unit Market price per unit al guidelines based on Opportunity cost per unit Choose from any list or enter any number in the input fields and then continue to the next question.Requirement 4. Suppose the manager of division A has the option of (a) cutting the external price to $292, with the certainty that sales will rise to 1,700 units, or (b) maintaining the external price of $300 for the 1,360 units and transferring the 340 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 so that the resulting decision would be desirable for the c Select the formula to calculate the minimum transfer price, then cal a perfectly competitive market for the intermediate product exists. an intermediate market exists that is not perfectly competitive. no market exists for the intermediate product. The price consistent with the general guidelines based onRequirement 1. Should transfers be made to division B if there is no unused capacity in division A? Is the market price the correct transfer price? Show your computations. Begin by calculating the gain or loss if transfers are made to division B when there is no unused capacity in division A. Select the formula you will use and enter the amounts. (Use parentheses or a minus sign for a loss.) = Gain (loss) from transfer Incremental cost Incremental revenue is no unused capacity in division A? Selling price for final product Selling price for intermediate product correct transfer price. = Minimum transfer priceRequirement 1. Should transfers be made to division B if there is no unused capacity in division A? Is the market price the correct transfer price? Show your computations. Begin by calculating the gain or loss if transfers are made to division B when there is no unused capacity in division A. Select the formula you will use and enter the amounts. (Use parentheses or a minus sign for a loss.) = Gain (loss) from transfer Should transfers be made to division B if there is no unused capacity in division A? Select the formula you will use to calculate the correct transfer price. Minimum transfer price Incremental cost per unit Market price per unit Opportunity cost per unit maximum capacity for this product is 1,700 units per month and sales to the intermediate market are now 1,360 units. Assume that for a variety of reasons, division A will maintain