The GPS Systems Division is presently producing 75,000 units out of a total capacity of 150,000 units. Materials used in producing the Communication Systems Division's product are currently purchased from outside suppliers at a price of $60 per unit. The GPS Systems Division is able to produce the materials used by the Communication Systems Division at a variable cost of $45 per unit. Except for the possible transfer of materials between divisions, no changes are expected in sales and expenses. Required: 1. Would the market price of $60 per unit be an appropriate transfer price for Birrell Scientific Inc.? No 2. If the Communication Systems Division purchases 25,000 units from the GPS Systems Division, rather than externally, at a negotiated transfer price of $52 per unit, how much would the operating income of each division and the total company operating income increase? The GPS Systems Division's operating income would increase by $ 175,000 The Communication Systems Division's operating income would increase by $ 200,000 Birrell Scientific Inc.'s total operating income would increase by $375,000 Feedback 3. Prepare condensed divisional income statements for Birrell Scientific Inc. based on the data in part (2). Birrell Scientific, Inc. Divisional Income Statements For the Year Ended December 31, 2045 GPS Division Communication Division Total Sales: 75,000 units 4,500,000 $ 4,500,000 25,000 units 1,300,000 1,300,000 145,000 units 16,675,000 16,675,000 5,800,000 16,675,000 22,475,000 Expenses: Variable: 100,000 units 25,000 units 120,000 units I III Fixed Total expenses $ $ Operating income $ 4. If a transfer price of $49 per unit is negotiated, how much would the operating income of each division and the total company operating income increase? The GPS Systems Division's operating income would increase by The Communication Systems Division's operating income would increase by Birrell Scientific Scientific Inc.'s total operating income would increase by 5a. What is the range of possible negotiated transfer prices that would be acceptable for Birrell Scientific Inc.? Between $ and $