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 outside customers. Also assume that $4 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 20,000 units to Division B for $115 and that Division B refuses this price. What will be the loss in potential profits for Division A? [2 marks]

Muharraq Co., la Division A that manufactures and sells a number of parts, including Part XYZ. Dals concerning Part XYZ appear below Capacity in units Selling price to outside customers Variable cost per unit $5,000 5.95 $55 Fixed cost per unit (based on capacity) $20 The company has Division B that could use Part XYZ in one of its products. Division B is currently purchasing 20,000 of Part XYZ per year from an overseas supplier at a cost of $95 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] & Assame again that Division A is selling all of Part XYZ it can produce to outside customers. Also asmane that 54 in variable expenses can be avoided on transfers within the company dac to reduced shipping and selling costs. What is the acceptable range, if any, for the transfer price between the two divisions? (4 marks] . Based on requirement (a), asume Division A offers to sell 20,000 units to Division 1 for $115 and that Division B refuses this price. What will be the loss in potential profits for Division A7 [2 marks] For the toolbar, press ALT+F10 (PC or ALT-FN-F10(Mac) BIVS Arial Paragraph 10pt EV I. #HI XQ EE SE +