Please help me solve these 2 questions:

1. In the United States, organ procurement organizations (OPOs), transplant centres, and the medical professions coordinate the organ donation process. The U.S. government pays for this treatment through its Medicare program. What price should the U.S. government pay for these organs from the taxes it collects from all citizens? Often multiple organs are removed from a single donor, meaning that there are joint costs such as operating room time, surgeons fees, and medications to preserve the organs. The OPOs insist all costs be allocated to each organ, irrespective of whether the organ is actually collected for transplant. For example, lung and kidney donations may be planned, but the surgeon discovers post-mortem that the lungs are not viable. A portion of joint costs will still be assigned to the lungs; otherwise, total costs of the donation would be assigned to the kidneys. The payer, the U.S. government, does not want to pay the joint costs assigned to the lungs. The Medicare program pays only for transplanted organs. Over 62% of all kidney transplants are paid for by Medicare. Six years ago, a government audit revealed that, of the total of $80 million in organ acquisition costs, $47 million were unallowable and unsupported. * Some organs, such as one kidney, part of a liver, part of a lung, bone marrow, and stem cells, can be recovered from live donors. The recovery of these organs requires major surgery and patients are anaesthetized. The surgeon ensures the donors organs are suffused with a protective chemical and removes the organ. The donated organ is preserved in a chemical and placed in a refrigerated container for immediate transport. The donor often recovers after two to five days in hospital. In contrast, stem cells are recovered from live donors who receive medication to increase the number of stem cells in the blood for four to five days prior to the transplant. The process is similar to a blood donation. The stem cells are extracted from whole blood removed intravenously from the donors arm. The rest of the blood is returned to the donor while the stem cells are sealed in plastic packs, placed in a special container, and transported to the recipient. The donor usually returns home to rest for the remainder of the day before resuming normal life. The stem cells are injected intravenously into the recipients arm.

Required

1. Of the reasons to use acceptable methods to allocate joint costs, which ones are relevant in this case?

2. What costs are incurred beyond the splitoff point that differ between these two types of donations?

3. What would the separable costs be?

4. In Canada, where all medically necessary care is paid for from tax revenue, of what relevance is joint cost allocation?

2. The Orsilo Corporation makes and sells 10,000 multisystem music players each year. Its assembly division purchases components from other divisions of Orsilo or from external suppliers and assembles the multisystem music players. In particular, the assembly division can purchase the CD player from the compact disc division of Orsilo or from Johnson Corporation. Johnson agrees to meet all of Orsilos quality requirements and is currently negotiating with the assembly division to supply 10,000 CD players at a price between $38 and $45 per CD player. A critical component of the CD player is the head mechanism that reads the disc. To ensure the quality of its multisystem music players, Orsilo requires that if Johnson wins the contract to supply CD players, it must purchase the head mechanism from Orsilos compact disc division for $20 each. The compact disc division can manufacture at most 12,000 CD players annually. It also manufactures as many additional head mechanisms as can be sold. The incremental cost of manufacturing the head mechanism is $15 per unit. The incremental cost of manufacturing a CD player (including the cost of the head mechanism) is $25 per unit, and any number of CD players can be sold for $35 each in the external market.

Required

1. What are the incremental costs minus revenues from sales to external buyers for the company as a whole if the compact disc division transfers 10,000 CD players to the assembly division and sells the remaining 2,000 CD players on the external market?

2. What are the incremental costs minus revenues from sales to external buyers for the company as a whole if the compact disc division sells 12,000 CD players on the external market and the assembly division accepts Johnsons offer at (a) $38 per CD player or (b) $45 per CD player?

3. What is the minimum transfer price per CD player at which the compact disc division would be willing to transfer 10,000 CD players to the assembly division?

4. Suppose that the transfer price is set to the minimum computed in requirement 3 plus $1, and the division managers at Orsilo are free to make their own profit-maximizing sourcing and selling decisions. Now, Johnson offers 10,000 CD players for $40.50 each.

a. What decisions will the managers of the compact disc division and assembly division make?

b. Are these decisions optimal for Orsilo as a whole?

c. Based on this exercise, at what price would you recommend the transfer price be set?

Thank you.

You ask for additional information, but that's all about it from the textbook, since I copied from my Kindle version textbook. I didn't remove anything from the original and don't know what more to give you. They are from Cost Accounting: Managerial emphasis 7th Canadian edition.