Required information Required information [The following information applies to the questions displayed below.] [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 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 of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits. divisional profits. Case Case A B A B Division X: Division X: Capacity in units 95,000 106, 000 95, 000 106, 000 Number of units being sold to outside customers Capacity in units 95,000 84, 060 Number of units being sold to outside customers 95, 000 84 . 000 Selling price per unit to outside customers $ 52 $ 34 Selling price per unit to outside customers $ 52 $ 34 Variable costs per unit 27 12 Variable costs per unit $ 27 $ 12 Fixed costs per unit (based on capacity) $ 7 $ 6 Division Y: Fixed costs per unit (based on capacity) $ 7 Division Y: Number of units needed for production 22, 006 22, 008 Number of units needed for production 22, 006 22, 006 Purchase price per unit now being paid to an outside Purchase price per unit now being paid to an outside supplier $ 47 $ 24 supplier $ 47 $ 24 Required: 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? 2. Refer to the data in case B above. In this case, there will be no savings in variable selling costs on intracompany sales. b. What is the highest acceptable transfer price from the perspective of the buying division? a. What is the lowest acceptable transfer price from the perspective of the selling 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 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? decisions on their own, will a transfer probably take place