[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 B Division X: Capacity in units 97,000 91,000 Number of units being sold to outside customers 97,000 71,000 Selling price per unit to outside customers $ 59 $ 34 Variable costs per unit $ 27 $ 19 Fixed costs per unit (based on capacity) $ 7 $ 6 Division Y: Number of units needed for production 20,000 20,000 Purchase price per unit now being paid to an outside supplier $ 54 $ 38 Required: 1. Refer to the data in case A above. Assume in this case that $3 per unit in variable selling costs can be avoided on intercompany 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?

Search instead for

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?

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? Identify the range of acceptable transfer prices (if any): OThere is not a range of acceptable transfer prices. OThere is a range of acceptable transfer prices as shown below: Are the managers likely to agree on a transfer price