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Please show step by step working! Thank you! 10. There are two divisions in XYZ Co. Division A has a product that can be sold
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10. There are two divisions in XYZ Co. Division A has a product that can be sold either to outside customers or to Division B. The company uses the opportunity cost approach to determine transfer price. Any joint benefits would be split evenly between the two divisions. Information about these divisions is given below: Case 1 Case 2 Division A: Capacity in units 10,000 10,000 Number of units sold externally 10,000 6,000 Market selling price $100 $125 Variable costs per unit 60 72 Fixed costs per unit based on capacity 10 10 Division B: Number of units needed for production 4,000 4,000 Purchase price per unit from external supplier $95 $90 Determine the minimum price, the maximum price, and the optimal transfer price in both casesStep by Step Solution
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