Required information

$[$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.

Required:

Refer to the data in case B above. In this case, there will be no savings in variable selling costs 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?