Xyz manufactures pencils. Division A of the company provides the lead to be used in the pencils. Division B takes the lead and other raw material inputs and assembles them in to completed pencils. Division B thinks it is always smarter to purchase the lead from within the company. Information for Divisions A and B is below:The only other supplier of the lead sells it for $$19$ per unit. Both divisions have unlimited demand for their product.Division ADivision B

Capacity $($units$)$A$)7,200$ B$)4,350$

Fixed manufacturing A$)$$$14,400$ B$)$$$34,800$

Variable manufacturing A$)$ $$12$ per unit B$)$ $$9$ per unit

Selling Price of ProductA$)$ $$17$ per unit B$)$ $$40$ per unit

$1)$Using the general guideline, what should be the lowest acceptable transfer price from the perspective of Division A$?-$

$$17,$

$-$$$12$

$-$ $$14$

$-$ Or the price that would make the buying division indifferent

$2)$If the company were to follow the general guideline, would the transfer be made between the divisions?

$-$No$.$ division B wouldn't accept the transfer at the price suggested by the general guideline

No$.$ A would not be willing to sell at the transfer price suggested by the general guideline

$-$There is not sufficient information to answer the question

$-$Yes

$3)$ What is the difference in total income for the firm as a whole between Division A transferring $4,350$ units to Division B or the transfer not occurring?

$-$$$60\mathrm{.}900$

$-$$$21,750$

$-$$$8,700$

$-$The net income would be the same under both scenarios