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12.75 Transfer pricing Qvat Division, a subsidiary of Imogene Ltd., manufactures a silicon...

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12.75 Transfer pricing Qvat Division, a subsidiary of Imogene Ltd., manufactures a silicon chip with the following costs: Direct material $15.00 Direct labor 26.25 Variable overhead Fixed overhead 18.00 Total $72.00 Some of the chips are sold externally for $162.00; others are transferred internally to the Kwak Division. Qvat Division's plant manager wants to establish a reasonable transfer price for chips transferred to Kwak. The purchasing manager of Kwak Division has informed the plant manager that comparable chips can be purchased externally in a price range from $112.50 to $172.50. a. Determine the upper and lower limits for the transfer price between Qvat Division and Kwak Division. Upper limit: $ Lower limit: $ + Any opportunity cost. b. If Qvat Division is presently selling all the chips it can produce to external buyers, what minimum price should be set for transfers to Kwak Division? $

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