44. Ryan manages a small plant that supplies containers to his firms paint division. He only produces what is ordered by the paint division and cur- rently supplies 900,000 cans per month. His total monthly variable and fixed costs are $450,000 and $1,080,000, respectively. The market price is $1.50 per can.

    Required

    1. What is the profit in Ryans plant if the transfer price were set at the market price?

    2. Using 110% of full cost as the transfer price, what is the profit in Ryans plant?

    3. What is the impact on the firms profit if it switches from a market-based transfer

       price to a cost-based transfer price? Ignore tax considerations and assume that vol- ume is unaffected.