Transfer Pricing Range of acceptable transfer prices Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A:

Market price per circuit board $ 140.32

Variable cost per circuit board $ 116.00

Number of circuit boards:

Sold to outside customers each year 14,400

Required by Division B 7,100

The circuit boards purchased by Division B are plentiful, they used in an electronic instrument manufactured by division B (one board per instrument). The completed instruments sell for $930 each. Required:

1. If division A has total capacity of 50,000 units, what is the range of acceptable transfer prices?

2. If division A has capacity of 20,500 units, what is the range of acceptable transfer prices?