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Division A and Division B are divisions within the same company. The managers of both divisions are evaluated bend their divis's on (of) Assume the following information relative to two divisions Division A Capacity in units Numbers of units now being sold to outside customers Selling price per unit to outside customers Variable costs per unit Fixed cost per unit (based on capacity) Division B Number of units needed annually Purchase price now being paid to an outside supplier 100,000 100,000 585 565 $15 35,000 584 A study indicates that Division A can avoid $5 per unit in shipping costs on any sales to Division B. Required: Compute the following 1. Calculate the lowest acceptable transfer price for the seller (Division A)? 2. Calculate the highest acceptable transfer price for the buyer (Division B)? 3. Calculate the range of acceptable transfer prices between the two divisions? 4. Assume Division A offers to sell 35,000 units to Division B for $83 and that Division B refuses this price. What will be the loss in potential profits for the company as a whole and for each division? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac) BIUS Paragraph Arial 10pt > Tii > A 19 I. B 0 www. Question 4 Division A and Division B are divisions within the same company The managers of both do we evaluated band their division's Assume the following information relative to two division Division A Capacity in t Variable costs per unit Numbers of units now being sold to outside customers 100,000 100,000 Selling price per unit to outside customers $85 $65 $15 35,000 584 Fixed cost per unit (based on capacity) Division B Number of units needed annually Purchase price now being paid to an outside suppler A study indicates that Division A can avoid $5 per unit in shipping costs on any sales to Division B. Required: Compute the following 1. Calculate the lowest acceptable transfer price for the seller (Division A 2. Calculate the highest acceptable transfer price for the buyer (Division B)? 3. Calculate the range of acceptable transfer prices between the two divisions? 4. Assume Division A offers to sell 35,000 units to Division B for $83 and that Division B refuses this price. What will be the loss in potential profits for the company as a whole and for each division? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac) BIU F Paragraph Arial 4 100t T

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