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The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can...

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Accounting

The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a
market price of $101 each. Each trailer incurs $49 of variable manufacturing costs. The Trailer division has capacity for 23,000 trailers
per year and has fixed costs of $470,000 per year.
Assume the Assembly division of Baxter Bicycles wants to buy 5,600 trailers per year from the Trailer division. If the Trailer
division can sell all of the trailers it manufactures to outside customers (and has no excess capacity), what price should be used
on transfers between divisions?
Assume the Trailer division currently only sells 9,300 trailers to outside customers and has excess capacity. The Assembly
division wants to buy 5,600 trailers per year from the Trailer division. What is the range of acceptable prices on transfers
between divisions?
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