OEM Company, which manufactures sports equipment, consists of several divisions. Each division operates as a profit centre with full autonomy. Division B informed Division A that it has changed its transfer pricing policy from variable-cost plus to full-cost plus pricing. Division A decided to purchase component EX1 outside the company when Division B increased the transfer price from $156 to $164 per unit. Information for Division A and Division B with respect to component EX1 is as follows: Outside price for component EX1 Division A's annual purchases Division B's variable manufacturing cost Division B's fixed manufacturing cost Division B's production capacity Division B's capacity utilization $160 10,000 units $120 per unit $1,000,000 50,000 units 100% All units of component EX1 produced by Division B can be sold in the market. Variable selling cost is $7 per unit for external sales. All other selling and administrative costs are fixed, regardless of whether component EX1 is sold to Division A or other external customers. Division B will sell component EX1 to external customers at the market price of $160 per unit. 64. Which of the following statements is true? a) Division A purchases 10,000 units of component EX1 from the outside supplier at a price of $160 and the company saves $40,000 in costs. b) Division B sells 10,000 units of component EX1 to Division A at $164 and the company income increases by $110,000. c) Division A purchases 10,000 units of component EX1 from Division B because Division B has idle capacity if Division A purchases the component extemally. d) Division B sells all 50,000 units of component EX1 to external customers and the company maximizes its income. e) Division A purchases 10,000 units of component EX1 from Division B and the company income increases by $70,000. 65. Now assume that Division B is currently selling 46,000 units externally instead of 50,000 units, and has not changed its transfer pricing policy. What is the minimum transfer price per unit that Division B would accept to provide Division A with the 10,000 units it requires? a) $120.00 b) $125.00 c) $139.80 d) $160.00 e) $144.00