The Sheridan Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept

or reject transfers from other divisions. Division A produces a sub$-$assembly part for which there is a competitive market. Division B

currently uses this sub$-$assembly for a final product that is sold outside at $$1,368.$ Division A charges Division $B$ the market price of

$$798$ per unit of the part. Unit variable costs are $$594$ and $$684$ for Divisions A and B$,$ respectively.

The manager of Division B feels that Division A should transfer the part at a lower price than market because at market, Division B is

unable to make a profit.

$($a$)$

Your answer is correct.

Calculate Division B$\text{'}$s contribution margin if transfers are made at the market price, and calculate the company's total

contribution margin. $($Enter negative amounts using either a negative sign preceding the number e$.$g$.-45$ or parentheses e$.$g$.(45).)$

Division B$\text{'}$s contribution margin

Company's total contribution margin

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$($b$)$

Your answer is partially correct.

Assume that Division A can sell all its production in the open market. Should Division A transfer the goods to Division B$?$

The transfer

be made.

If so$,$ at what price?

Market price

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$($c$)$

Assume that Division A can sell only $500$ units externally at $$798$ per unit out of the $1,000$ units that it can produce every month.

Assume also that a $20\%$ reduction in price is necessary to sell all $1,000$ units each month. Should transfers be made?

If so$,$ how many units should the division transfer and at what price? $($Round price per unit to $1$ decimal place, e$.$g$.52\mathrm{.}7.)$

units at