Question 1: Transfer pricing and Special-orders Bruce Company manufactures only one type of washing machine and has two divisions, the Compressor Division (Division 1) and the Fabrication Division (Division 2). Division 1 manufactures compressors for Division 2 as well as for the outside market. Division 2 can also buy the compressors from external markets, complete the washing machine, and sell it to retailers. Both divisions are treated as profit centres and can freely choose their suppliers and customers. If the products are transferred internally between two divisions, no packaging and advertising cost will be incurred for Division 1. Data regarding both Divisions for the last month is presented as follows:

1) Determine the minimum transfer price per unit that Division 1 would accept if Division 2 wants to acquire an order equivalent to its current (total) capacity from Division 1.

2) Determine the maximum transfer price per unit that Division 2 would pay for any order size to Division 1.

3) Determine what transfer price per unit would be the best for the parent company when Division 1 has spare capacity.

4) What transfer price per unit would Division 1 accept if it had no spare capacity?

5) What transfer price per unit would you recommend for the company as a whole if Division 2 wants to acquire an order equivalent to its current (total) capacity from Division 1, but Division 1 has a spare capacity for half of it?

6) Determine the minimum special-order unit price for Division 1 if the Division receives a special order from an outsider equivalent to 50% of its capacity but has only 25% spare capacity?

THESE ARE THE SOLUTIONS:

1) $177

2) $201

3) $58

4) $177

5) $117.65

6) $125.65

CAN SOMEONE HELP DO THE WORKINGS FOR THE SOLUTIONS PLEASE.