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er the next twe questions using the information below Kohlson Corporation has two divisions: Parts and Assembly. The Parts Division makes Part G2 for sale to outside customers: Production capacity Demand from outside customers 2,000 units per month 1,000 units per month Per unit data for G2 for outside customers: Selling price Variable production cost Variable selling cost Allocated fixed cost 17.00 S 12.00 S2.50 S1.25 y Division has designed a new product that also uses Part G2. For its new product, the Assembly ision would need 2.500 units of G2 each month, and the Parts Division would not incur variable selling costs for these units. Assuming the Parts Division would cut back on sales to outside customers in order to supply G2 to the Assembly Division (if necessary), what is the lowest acceptable transfer price from the viewpoint of the selling division? 1 13.50 14.50 A. S B. S C. $ 16.00 D. S 12.75 E. None of the above 22 Which of the following statements about the transfer of G2 between these divisions is NOT correct? A. The Assembly Division should not be willing to pay a transfer price to the Parts Division that is more than the price for G2 charged by an outside supplier, if one is available. B. The transfer price used for the exchange of G2 between the Parts and Assembly Divisions of Kohlson cannot affect each divisions' reported profits. C. If a range of acceptable prices exists. Kohlson Corporation's profitability will increase if the Parts Division provides G2 to the Assembly Division. D. If it could not obtain G2 from an outside supplier, the profit to be earned per unit of their new product, not including the transfer price for G2, would represent the highest acceptable transfer price that the Assembly Division should be willing to pay All of the above statements are true E

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