Transfer Pricing Aulman Inc. has a number of divisions Including a Funiture Division and a Motel Division. The Motel Division owns and operates a line of budoet motels located along mafor highways. Each year, the Motel Division purchases furniture fo Currently, it purchases a basic dresser from an outside supplier for $50. The manager of the Furniture Division has approached the manager of the Motel Division about selling dressers to the Motel Division. The full product cost of a dresser is $29 while the Furniture Di saon has capacity 50,000 dressers per year and selling them for50 each it expects to produce and sell only 40 000 dressers for $50 each next year. The Furniture Dr On incurs variable costs of $16 per dresser The Motel Division needs 10,000 dressers per year; the Furniture Division can make up to 50,000 dressers per year. The company policy is that all transfer prices are negotiated by the divisions involved. Required 1. What is the maximum transfer price? operates a line of budget motels located alon g mafor highways. Each year, the M about selling dressers to the M or the motel rooms been operating at divisions involved Which division sets it? 2. What is the minimum transfer price? Which division sets it? 3. Suppose that the two divisions agree on a transfer price of $34. What is the benefit for the Furniture Division? For the Motel Division? For Aulman Inc. as a whole? Benefit to Furniture Division Benefit to Motel Division Benefit to company