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Division A and Division W are two of the many divisions of ABC Inc. Division A currently manufactures a product, the Yo, that is sold entirely to external customers. Division W currently manufactures a product that uses one unit of the Yo. Division W purchases the Yo equivalent from an external supplier. Annual requirements of the Yo by Division W is 90,000 units. Division A's variable manufacturing cost for each unit of Yo is $ 15. In addition $ 3 of variable selling costs are incurred. Variable selling costs would not be incurred on external transfers. Division A has a capacity of 400,000 units. The market price for a Yo is $ 40 per unit (also equal to the price paid for a Yo purchased by Division W.) Required: a. Assume that Division A is currently selling 300,000 units of Yo on the open market, what is the lowest price at which Division A would be willing to transfer a Yo to Division W? b. Independent to part (a), assume Division A is selling 360,000 units annually, what would the benefit to ABC Inc if a transfer were to take place between the 2 divisions? c. In reference to Part (b), assume that a transfer price of $ 30 is negotiated, what is the incremental income to Division A of making an internal transfer of 90,000 units to Division W

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