Twyla Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept or reject transfers from other divisions. Division A produces a subassembly part for which there is a competitive market. Division B currently uses this subassembly for a final product that is sold outside at $2,410. Division A charges Division B market price for the part, which is $1,530 per unit. Variable costs are $1,120 and $1,170 for Divisions A and B, respectively. The manager of Division B feels that Division A should transfer the part at a lower price than market because at market, Division B is unable to make a profit.

Calculate Division Bs contribution margin if transfers are made at the market price, and calculate the companys total contribution margin. (Enter negative amounts use either a negative sign preceding the number eg -45 or parentheses eg (45).)

Division B's contribution margin		$ per unit
Companys total contribution margin		$ per unit

Assume that Division A can sell all its production in the open market. Should Division A transfer the goods to Division B? Yes/No?

Assume that Division A can sell in the open market only 520 units at $1,530 per unit out of the 1,040 units that it can produce every month. Assume also that a 16% reduction in price is necessary to sell all 1,040 units each month. Compute the contribution margins under the following three different alternatives to support your decision. (Round intermediate calculations to 2 decimal places, e.g. 125.25 and final answers to 0 decimal places, e.g. 125.)

Alternative 1:		Maintain price, no transfers		$
Alternative 2:		Cut price, no transfers		$
Alternative 3:		Maintain price and transfers		$

Should transfers be made? Yes/No? If so, how many units should the division transfer and at what price? (If no transfer is necessary input 0 units at $0.) The division should transfer _____units at $______