Tulip Company is made up of two divisions: A and B. Division A produces a widget that Division B uses in the production of its product. Variable cost per widget is $1.60; full cost is $2.70. Comparable widgets sell on the open market for $3.40 each. Division A can produce up to 3.10 million widgets per year but is currently operating at only 50 percent capacity. Division B expects to use 155,000 widgets in the current year. Required: 1. Determine the minimum and maximum transfer prices. (Enter your answers to 2 decimal places.) minimum transfer price:

maximum transfer price : 2. Calculate Tulip Companys total benefit of having the widgets transferred between these divisions. total benefit: 3. If the transfer price is set at $1.60 per unit, determine how much profit Division A will make on the transfer. Determine how much Division B will save by not purchasing the widgets on the open market. (Round your answers to 2 decimal places.) division A profit:

division B profit: 4. If the transfer price is set at $3.40 per unit, determine how much profit Division A will make on the transfer. Determine how much Division B will save by not purchasing the widgets on the open market. (Round your answers to 2 decimal places.) division A profit

division B savings: 5. What transfer price would you recommend to split the difference? (Round your answer to 3 decimal places.)

Mutually beneficial transfer price: