Required information Exercise 11-13 (Algo) Transfer Pricing Situations [LO11-3] [The following information applies 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. Case Division X Capacity in units. 107,000 Number of units being sold to outside customers Selling price per unit to outside customers, 107,000 106,000 84,000 Variable costs per unit $ 55 $ 22 $ 35 $ 12 Fixed coats per unit (based on capacity) $ 9 $6 Division YI Number of units needed for production 22,000 22,000 Purchase price per unit now being paid to an outside supplier $ 49 $ 24 ces 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? Complete this question by entering your answers in the tabs below. eBook Complete this question by entering your answers in the tabs below. Hint Req 1A Req 18 Req 1C Print What is the lowest acceptable transfer price from the perspective of the selling division References Lowest acceptable transfer price eBook Hint Req 1A Req 1B Req 1C Print References What is the highest acceptable transfer price from the perspective of the bu Highest acceptable transfer price < Req 1A Req HO ok nt nt nu ences What is the range of acceptable transfer prices (if any) between the two divisions? If the 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 prices Are the managers likely to agree on a transfer price? OYes ONo < Req 1B Req 1C