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Problem 1 Gamma Division of Vaughn Corporation produces electric motors, 20% of which are sold to Vaughan's Omoon Division and 80'% to outide antomon, Vaughn wants its divisions as profit centers and allows division managers to choose whether to sell to or buy from infomal divisions. Corporate policy requires that ofl interdivisional sales and purchases ba tanslowed at variable cost Gamma Division's out mated sales and standard cost data for the year ended December 31, based on a capacity of 60 000 units, are as follows: 400 005 Loss: Variable costs Contribution margin Low: Fixed costs 175 003 12 00% Comma has an opportunity to sell the 12 000 units shown above to an outide customer at $80 por unit Omopa can purchase the unles it needs from an outside supplier for $92 each A. Assuming that Gamma desires to maximize operating income, should i take on the new customer and discontinue sales to Omopat Why? (Now: Anmover this question from Gamma's porspoofve.} B. Assume that Vaughn allows division managers to negotiato transfer pricia. The managing agreed on a tentative price of P20 per unit, to be reduced by an equal sharing of the add Bond Gomme Income hat myputt from the tuala to Omega of 12 000 motors at P80 per unit. On the basis of this information, compute the company's new transfer price

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