Which is the correct answer on the 3 questions below?

Division 1 of Ace Company makes and sells wheels that can either be sold to outside customers or transferred to

Division 2. The following data are available from last month:

	Division 1:
	Selling price per wheel to outside customers	$50
	Variable cost per wheel when sold to outside customers	$35
	Capacity in wheels	15,000
	Division 2:
	Number of wheels needed per month	5,000
	Price per wheel paid to an outside supplier	$47

If Division 1 sells the wheels to Division 2, Division 1 can avoid $2 per wheel in sales commissions.

28. Suppose that Division 1 sells 7,500 units per month to outside customers. What is the lowest acceptable transfer price from the viewpoint of the selling division if Division 2 requires 5,000 units per month from Division 1?

a) $33

b) $35

c) $47

d) $50

29.What is the maximum price per wheel that Division 2 should be willing to pay Division 1 if a transfer were to take place?

a) $33

b) $35

c) $47

d) $50

30. Suppose that Division 1 sells 15,000 units each month to outside customers, what is the lowest acceptable

transfer price from the viewpoint of the selling division?

a) $48.00

b) $43.50

c) $37.50

d) $34.73