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i Requirements 1. Assume that the Tire Division has excess capacity, meaning that it can produce tires for the Tractor Division without giving up any of its current tire sales to outsiders. If Germain Motors has a negotiated transfer price policy, what is the lowest acceptable transfer price? What is the highest acceptable transfer price? 2. If Germain Motors has a cost-plus transfer price policy of full absorption cost plus 20%, what would the transfer price be? 3. If the Tire Division is currently producing at capacity (meaning that it is selling every single tire it has the capacity to produce), what would likely be the fairest transfer price strategy to use? What would be the transfer price in this case? i More Info Direct material cost per tire $25 Conversion costs per tire $3 (Assume the $3 includes only the variable portion of conversion costs.) Fixed manufacturing overhead cost for the year is expected to total $102,000. The Tire Division expects to manufacture 51,000 tires this year. The fixed manufacturing overhead per tire is $2 ($102,000 divided by 51,000 tires). Requirement 2.8 Germain Motors has a cost-plus transfer price policy of absorption cost plus 20%, what would the transfer price be? (Assume the $3 includes only the variable portion of convention to Begin by selecting the formula to compute the transfer price under the strategy - Cost-plus transfer price Germain Motors has a cost plus transfer price policy of absorption cost plus 20%, the transfer price would be $ Requirement gyto there Division is current producing capacity meaning that is sling every single tire has the capacity to producel, what would hely be the first transfer price What would be the transfer price in this case? to use the When a company is producing and selling capacity, the first transfer price try In this case, the transfer price would be

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