Transfer Prices and Divisional Profit (20 points)

A. chair manufacturer has two divisions: framing and upholstering. The framing costs are $100 per chair and the upholstering costs are $200 per chair. The company makes 5,000 chairs each year, which are sold for $500.

a. What is the profit of each division if the transfer price is $150?

b. What is the profit of each division if the transfer price is $250?