United Propulsion Products, Inc. based in Stamford, CT has two operating plants: Component Fabrication and Component Assembly to manufacture their products for the private jet industry. The Component Fabrication monthly full capacity production is 10,000 units and sells these products for $75 per component. Production generates variable costs per unit of $27.50 and monthly fixed costs for depreciation, amortization, salaries, leases, etc. of $93,750. This generates approximately a 51% operating margin for the Fabrication operations. Component Assembly can acquire units from Fabrication for a Transfer Price of $75.00 plus $5.00 freight costs. Alternatively, it can purchase necessary units from an independent 3rd party supplier for $77.50 per unit. Analyze the financial considerations in Part A if Fabrication is operating at 100% capacity. Analyze the financial considerations in Part B if Fabrication is operating at 70% capacity and can meets Assembly's needs. Acquision Cost Transfer Transportation Division Component Fabrication Component Assembly Offers 75.00 $ Variable Cost $ 27.50 Production 10,000 Fixed Cost 93,750 $ $ 77.50 $ 75.00 5 .00 Component Assembly 1 Corporate Level Full Capacity Transfer internally Part A - Full Capacity Production Level Capacity Production Level Component Fabrication Receives Pays Pays Pays Receives Optimal to transfer??? Part - Idle Capacity Production Lovel-sufficient to cover Assembly Needs Component Assembly Component Fabrication Receives Pays 10 Transfer internally Pays Receives 23 Sell externally Domalta transfer