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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

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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 (if any) between the two divisions? If the managers are free to negotiate and make decisions on their own, will a transfer probably take place?

Required information Exercise 11-13 (Algo) Transfer Pricing Situations [LO11-3] [The following information opplies to the questions disployed below.] In each of the coses below, assume Division X has a product that can be sold either to outside customers or to Division Y of the same compony for use in its production process. The monogers of the divisions are evoluoted bosed on their divisionsl profits

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