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Transfer Pricing, Idle Capacity

Asgard Farms, Inc., has a number of divisions that produce jams and jellies, condiments and glassware. The Glassware Division manufactures a variety of bottles that can be sold externally (to soft-drink and juice bottlers) or internally to Asgard Farm's Jams Division. Sales and cost data on a case of 24 basic 12-ounce bottles are as follows:

Unit selling price	$2.80
Unit variable cost	$1.20
Unit product fixed cost*	$0.65
Practical capacity in cases	570,000
*$370,500/570,000

During the coming year, the Glassware Division expects to sell 460,000 cases of this bottle. The Jams and Jellies Division currently plans to buy 94,450 cases on the outside market for $2.80 each. Bella Howard, manager of the Glassware Division, approached Paul Vining, manager of the Jams and Jellies Division, and offered to sell the 94,450 cases for $2.74 each. Bella explained to Paul that she can avoid selling costs of $0.13 per case by selling internally and that she would split the savings by offering a $0.06 discount on the usual price.

Required:

1. What is the minimum transfer price that the Glassware Division would be willing to accept? Round to the nearest cent. $ fill in the blank 1per unit

What is the maximum transfer price that the Jams and Jellies Division would be willing to pay? Round to the nearest cent. $ fill in the blank 2per unit

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