problem 11-44 Transfer Pricing GreenWorld Inc. is a nursery products firm. It has three divisions that grow and sell plants: the Western Division, the Southern Division Division of GreenWorld acquired a plastics factory that manufactures green plastic pots. These pots can be sold both externally and internally. Company policy permits each manager to decide whether to buy or sell internally. Each divisional manager is evaluated on the basis of ROI and EVA. OBJ , and the Canadian Division. Recently, the Southern The Western Division had bought its plastic pots in lots of 100 from a variety of vendors. The average price paid was $75 per box of 100 pots. However, the acquisition made Rosario anchez-Ruiz, manager of the Western Division, wonder whether or not a more favorable rice could be arranged. She decided to approach Lorne Matthews, manager of the Southern ivision, to see if he wanted to offer a better price for an internal transfer. She suggested a trans- r of 3,500 boxes at $70 per box. Lorne gathered the following information regarding the cost of a box of 100 pots Direct materials Direct labor Variable overhead Fixed overhead $35 10 10 $63 Total unit cost Fixed overhead is based on $200,000/20,000 boxes. Selling price $75 20,000 boxes Production capacity