Seller's financial information

Production capacity 1,000 units

Price to outside customers $110

Cost per unit:

Direct material $20

Direct labour * 30

Variable overhead 10

Fixed overhead 15

Total cost $75

Assume that the internal customer would like to buy the entire production capacity of 1,000 units.

Required (SHOW YOUR WORK)

Address the following scenarios:

If the seller can sell all of its capacity to outside customers, what is the seller's minimum acceptable transfer price? What is the buyer's maximum acceptable transfer price?

If the seller can sell only 600 units externally, what is the seller's minimum acceptable transfer price? What is the buyer's maximum acceptable transfer price?