Sells $75,000$ units of equipment to outside customers at $$130$ per unit Answer is complete but not entirely correct.

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Division A proposes to buy $37,500$ units from Division B at $$75$ per unit. What would be the effect of accepting this proposal

on Division B$\text{'}$s operating income? What would be the effect on the operating income of Phoenix Incorporated as a whole? Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

Required $2$

Required $3$

Now suppose Division A could purchase from multiple suppliers and would accept partialshipment from Division B$.$ How many

units should Division B sell to Division A at $$75$ per unit, if any? What would be the effect on Division B$\text{'}$s operating income?

What would be the effect on the operating income of Phoenix Incorporated as a whole?

Operating capacity is currently $80\%$; the division can operate at $100\%$

Variable manufacturing costs are $$70$ per unit

Variable marketing costs are $$8$ per unit

Fixed manufacturing costs are $$780,000$

Income per Unit for Division A $($assuming parts purchased externally, not internally from division B$)$

Required:

Division A proposes to buy $37,500$ units from Division $B$ at $$75$ per unit. What would be the effect of accepting this proposal on

Division B$\text{'}$s operating income? What would be the effect on the operating income of Phoenix Incorporated as a whole?

Now suppose Division A could purchase from multiple suppliers and would accept partialshipment from Division B$.$ How many units

should Division B sell to Division A at $$75$ per unit, if any? What would be the effect on Division B$\text{'}$s operating income? What would

be the effect on the operating income of Phoenix Incorporated as a whole?

What is the range of transfer prices over which the divisional managers might negotiate a final transfer price?