Tire r pric rice u st) x 1 Direct material cost per tire $22 Conversion costs per tire $5 (Assume the $5 includes only the variable portion of conversion costs.) Fixed manufacturing overhead cost for the year is expected to total $120,000. The Tire Division expects to manufacture 40,000 tires this year. The fixed manufacturing overhead per tire is $3 ($120,000 divided by 40,000 tires). capac accepta Requirements Tire Div Tire Div price p rice unde t) x 1.30 full absor 1. Assume that the Tire Division has excess capacity, meaning that it can produce tires for the Tractor Division without giving up any of its current tire sales to outsiders. If Garcia Motors has a negotiated transfer price policy, what is the lowest acceptable transfer price? What is the highest acceptable transfer price? 2. If Garcia Motors has a cost-plus transfer price policy of full absorption cost plus 30%, what would the transfer price be? 3. If the Tire Division is currently producing at capacity (meaning that it is selling every single tire it has the capacity to produce), what would likely be the fairest transfer price strategy to use? What would be the transfer price in this case? - X ortie costs per tire Garda Motors manufactures specialty tractors it has two divisions: a Tracter Division and a Tre Dion The Tractor Division can use the res produced by the Tre Division. The market price per fire is $30 The Tire Division has the folowing (Click the konto vew the costs and additional information) Read the G Requirement 1. Assume that the Tre Division has excess capacity, meaning that can produce tres for the Tractor Division without giving up any of its current tre sans to outsiders Garcia Motors has a negotiated price policy, what is the lowest acceptable transfer price? What is the highest acceptable transfer price? (Assume the $5 includes only the variable portion of conversion coeds.) The lowest acceptable transfer price is The highest acceptable trane price Requirement 2. 15 $27, the Tire Division's c 2. If Garcia Motors has a cost-plus transfer price policy of fat absorption cost plus 30%, what would the transter price be? (Assume the $5 includes only the variable portion of conversion cosas) Begin by selecting the formula to compute the transfer price under this strategy (Van Cost Fed Manufacturing Overhead Cost 1.30 Cost plus transfer price if Garcia Motors has a cost-plus transfer price policy of full absorption cost plus 30%, the tharter price would be