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(Click the icon to view the division data.) Requirement 1. Supp e to 1,500 units or (b) maintaining the external price of $170 for the 1,050 units and transfe Required price consistent with th ny as a whole? Begin by calculating th 1. Suppose the manager of Division A has the option of (a) cutting the external price to $165, with the certainty that sales will rise to 1,500 units or (b) maintaining the external price of $170 for the 1,050 units and transferring the 450 units to Division B at a price that would produce the same operating income for Division A. What transfer price would produce the same operating income for Division A ? Is that price consistent with that recommended by the general guideline in the chapter so that the resulting decision would be desirable for the company as a whole? 2. Suppose that if the selling price for the intermediate product were dropped to $165, sales to external parties could be increased to 1,150 units. Division B wants to acquire as many as 450 units if the transfer price is acceptable. For simplicity, assume that there is no external market for the final 350 units of Division A's capacity. a. Using the general guideline, what is (are) the minimum transfer price(s) that should lead to the correct economic decision? Ignore performance-evaluation considerations. b. Compare the total contributions under the alternatives to show why the transfer price(s) recommended lead(s) to the optimal economic decision. Division data

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