Problem 15-35 Transfer Pricing with Imperfect Markets: Ri Evaluation, Normal Costing (LO 15-2) Oxford Company has two divisions. Thames Division, which has an investment base of $80,000,000, produces and sols 230,000 units of a product at a market price of $146 per unit. Its variable costs tot 342 per unit. The division so charges each unit 371 of fixed costs based on a capacity of 1,100,000 units Lake Division wants to purchase 200,000 units from Thames. However, this willing to pay only 50 per unt because it has an opportunity to accept a special order at a reduced price. The order is economically Division managers are evaluated using residual income using a 12 percent cost of capital Required: 2. Ww la the residual income for Thames without the transfer to Lakes Redal income b. What is Thames's residual income i transfers 200,000 units to Lakes at 560 each? Residual income c. What is the minimum transfer price for the 200.000-unit order that Thames would accept if it were wiling to maintain the same residual income with the transfer as it would accept by selling is $30.000 units to the outside market? (Round your answer to 2 decimal places.) Minimur price Problem 15-35 Transfer Pricing with Imperfect Markets: Ri Evaluation, Normal Costing (LO 15-2) Oxford Company has two divisions. Thames Division, which has an investment base of $80,000,000, produces and sells $30,000 units of a product at a market price of $146 per unit. Its variable costs total $42 per unit. The division also charges each unit of food costs based on a capacity of 1,100,000 units Lakes Division wants to purchase 250,000 units from Thames. However, it is willing to pay only $80 per unit because it has an opportunity to accept a special order at a reduced price. The order is economically justflable only if Lakes an acquire Thames' output at a reduced price Division managers are evaluated using residual income using a 12 percent out of capital Required: What is the residual income for Thames without the transfer to Lakes? Recom b. What is Thames's residual income if it transfers 200,000 units to Lakes ut $80 each Residual income c. What is the minimum transfer price for the 200,000 unit order that Thames would accept if it were willing to maintain the same residual income with the transter as it would accept by neling is 230,000 units to the outside market? (Round your answer to 2 decimal places.) Minimum transfer price per un Required: What is the residual income for Thames without the transfer to Lakes? b. What is Thames's residual income il transfers 280,000 unts to Lakes at $80 each Residual income c. What is the minimum transfer price for the 200,000-unit order that Thames would accept it were willing to maintain the same residual income with the transfer as it would accept by selling its 30,000 units to the outside market? (Round your answer to 2 decimal places.) Minimum rer price per
