Question 3 10 points Muharraq Co., has Division A that manufactures and sells a mamber of parts, including Part XYZ. Data concening Part XYZ appear below Capacity in units Selling price to outside customers 70,000 $ 110 $75 Variable cost per unit Fixed cost per unit (based on capacity) $25 The company has Division B that could use Part XYZ in one of its products. Division B is currently purchasing 15,000 of Part XYZ per year from an overseas supplier at a cost of $109 per part Required: a. Assume that Division A is selling all of Pants XYZ it can produce to outside customers. What is the acceptable range, if any, for the transfer price between the two divisions? [4 marks] b. Assume again that Division A is selling all of Part XYZ it can produce to outude 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] c. 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] for the toolbarns TofSOIRES OF ALT+F+(Mac Question 3 10 points Saw A Muharraq Co, has Division A that manufactures and sells a number of parts, including Part XYZ. Data concerning Part XYZ appear below Capacity in units Selling price to outside customers Variable cost per unit 70,000 $110 $75 Fixed cost per unit (based on capacity) $25 The company has Division B that could use Part XYZ in one of its products. Division B is currently purchasing 15,000 of Pan XYZ per year from an overseas applier at a cost of $109 per part The company has Division B that could use Part XYZ in one of its products. Division B is currently purchasing 15,000 of Part XYZ per year from an overseas supplier at a cost of $109 per part Required: 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] b. Assume again that Division A is selling all of Part XYZ it can produce to outude customers. Also assume that $3 in variable expenses can be avoided on transfers within the company doe to reduced shipping and selling costs What is the acceptable range, if any, for the transfer price between the two divisions? [4 marks] c. 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 Divon A7 [2 marks] For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac) T IL S In
