Transfer Pricing Homework 1/ Lodging, Inc. has a number of divisions including a Furniture Division and a Motel Division. The Motel Division owns and operates a line of budget motels located along major highways Each year, the Motel Division purchases furniture for the motel rooms. Currently, it purchases a basic dresser from an outside supplier for $42 per unit. The manager of the Furniture Division has approached the manager of the Motel Division about selling dressers to the Motel Division. The costs of the Furniture Division to produce a dresser include: Direct materials $8 Direct labor Variable overhead 3 Fixed overhead 12 S 27 Currently, the Furniture Division has the capacity to produce 75,000 dressers but is only producing 60,000. The Motel Division needs 10,000 dressers per year Required 1. What is the maximum transfer price? What is the minimum transfer price? Should the transfer occur? Suppose that the managers of the two divisions agree on a transfer price of $30. What is the benefit to each division? What is the benefit to Lodging, Inc.? 3. Suppose that the Furniture Division were operating at capacity. What would be the maximum transfer price? The minimum transfer price? Should the transfer take place in this case