Off Road, 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 = X i Data Table 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 130 The manager of division B has made the following calculation: Selling price for final product $ 380 Transferred-in cost per unit (market) $ 300 190 490 Incremental cost per unit for completion $ $ (110) Contribution (Loss) on product Print Done Requirements - X 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 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