req 1B: high acceptable transfer price:

Required Information Exercise 11-13 (Algo) Transfer Pricing Situations (LO11-3) [The following information apples to the questions displayed below) In each of the cases below, assume Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits care A 92,000 71. Division X: Capacity in units Number of units being sold to outside customers Selling price per unit to outside customers Variable costs per unit Pred.costs per unit (based on capacity) Division V Number of units needed for production Purchase price per unit now being paid to an outside supplier 103.000 103, $50 $24 $12 3.15 314 21.00 21, $ 51 5.10 Exercise 11-13 (Algo) Part 1 Required: 1. Refer to the data in case A above. Assume in this case that $2 per unit in variable selling costs can be avoided on intracompany sales a. What is the lowest acceptable transfer price from the perspective of the selling division? b. What is the highest acceptable transfer price from the perspective of the buying division? c. What is the range of acceptable transfer prices of any between the two divisions of the managers are free to negotiate and make decisions on their own, wil a transfer probably take place? Complete this question by entering your answers in the tabs below. Req1A Reg 13 Reg 10 What is the lowest acceptable transfer price from the perspective of the selling division Real Reg 1B > Req 1A Req 1B Req 10 What is the range of acceptable transfer prices (if any) between the two division make decisions on their own, will a transfer probably take place? Identify the range of acceptable transfer prices (if any) There is not a range of acceptable transfer prices. There is a range of acceptable transfer prices as shown below: s Transfer price Are the managers likely to agree on a transfer price? Yes S NO