q1

Maharag Co. has DA that manufactures and sells a number of parts, including Pan XYZ. Data concening Part XVZ appear below Capacity in units 70,000 Selling price to outside customer Variable cust per unit $110 $75 Fixed cost per unit (hased on capacity) $25 The company has Division B that could use Part XYZ is one of its products, Division B is currently purchasing 15,000 of Pan XYZ per year from an overseas supplier at a cost of $100 per part Requirest: a. Assume that Division A is selling all of Part XYZ it can produce to outside customers. What is the acceptable range, if any, for the transfer price between the two divisions? (4 marks] h. Assume again that Division A is selling all of Part XYZ it can produce to outside customers. Also assume that $3 in variable expenses can be avoided on transfers within the company due to reduced shipping and selling costs. What is the acceptable range, if any, for the transfer price between the two divisions? [4 marks] e. Based on requirement (a), assume Division A offers to sell 15,000 units to Division B for $125 and that Division B refuses this price. What will be the loss in potential profits for Division A? [2 marks] LENA510 (Mack