Rapid Industries has multiple divisions. One division, Iron Products, makes a component that another division, Austin, is currently purchasing on the open market. Iron Products currently has a capacity to produce $505,000$ components at a variable cost of $$6\mathrm{.}00$ and a full cost of $$9\mathrm{.}50.$ Iron Products has outside sales of $455,000$ components at a price of $$14\mathrm{.}00$ per unit. Austin currently purchases $60,000$ units from an outside supplier at a price of $$11\mathrm{.}50$ per unit. Assume that Austin desires to use a single supplier for its component.

Required:

a$.$ What will be the effect on Rapid Industries' operating profit if the transfer is made internally? Assume the $60,000$ units Austin needs are either purchased $100\%$ internally or $100\%$ externally.

b$.$ What is the minimum transfer price?

c$.$ What is the maximum transfer price?

Complete this question by entering your answers in the tabs below.

Required $A$

Required $B$

What will be the effect on Rapid Industries' operating profit if the transfer is made internally? Assume the $60,000$ units Austin needs are either purchased $100\%$ internally or $100\%$ externally.