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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

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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 Case A D Division X: Capacity in units Number of units being sold to outside customers Selling price per unit to outside customers Variable costs per unit Fixed conto per unit (based on capacity) Division Yi Number of units needed for production Purchase price per unit now being paid to an outside oupplier 90,000 109,000 90,000 88,000 $ 59 $ 29 $ 22 19 $ 9 $ 4 21,000 21,000 $ 55 38 sales Required: 1. Refer to the data in case A above. Assume in this case that $1 per unit in variable selling costs can be avoided on Introcompany 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. Reg 1A Reg 13 Req 1C c. What is the range of acceptable transfer prices (if any) between the two divisi decisions on their own, will a transfer probably take place? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C What is the lowest acceptable transfer price from the perspective of the selling divisi Lowest acceptable transfer price I c. What is the range of acceptable prices (" decisions on their own, will a transfer probably take place? Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 1C What is the highest acceptable transfer price from the perspective of the buying division? Highest acceptable transfer price Req 1A Reg 1B Req 1C What is the range of acceptable transfer prices (if any) between the two divisions? If the ma 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 price s Are the managers likely to agree on a transfer price? 10Yes No

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