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Transfer Pricing: Various Computations Coming Company has a decentralized organization with a divisional structure. Two of these divisions are the Appliance Division and the Manufactured Housing Division. Each divisional manager is evaluated on the basis of ROL The Appliance Division produces a small automatic dishwasher that the Manufactured Housing Division can use in one of its models. Appliance can produce up to 28,000 of these dishwashers per year. The variable costs of manufacturing the dishwashers are $100. The Manicured Housing Division inserts the dishwasher into the model house and then sells the manufactured house to outside customers for $70,000 each. The division's capacity is 6,160 units. The variable costs of the manufactured house in addition to the cost of the dishwasher itself) are $45,000 Required: Assure each partis independent, unless otherwise indicated 1. Assume that all of the dishwashers produced can be sold to external customers for $20 each The Hanufactured Housing Division wants to buy 6,100 dishwashers per year. What should the transfer price bez $ 320 per unit 2. Refer to Requirement 1. Assume 18 of avoidable distribution costs. Identify the maximum and minimum transfer prices Maximum 5 320 per unit Minimum per unit Identify the actual transfer price, assuming that negotiation splits the difference per unit Identify the actual transfer price, assuming that negotiation split the difference per unit i ty buying 6.100 dishwashers from an outside supplier for $2.90 each. Assume that 3. Assume that the Appliance Division is operating 75 percent capacity. The Maractured Housing Division is c any joint benefit will be split evenly between the two divisions. What is the expected transfer price? per unit How much will the profits of the Appliance Division increase, assuming that it sells the extra 6,160 dishwashers internally? How much will the profits of the firm increase under this arrangement

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