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Required information [The following information applies to the questions displayed below.] In...

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Accounting

Required information
[The following information applies to the questions displayed below.]
In each of the cases below, assume Division x has a product that can be sold to outside customers or to Division Y of the
same company. The managers of the divisions are evaluated based on their divisional profits.
Required:
Refer to the data in case A above. Assume in this case $3 per unit in variable selling costs can be avoided on intracompany sales.
a. What is the lowest acceptable transfer price from the perspective of the selling division?
b. What is the highest acceptable transfer price from the perspective of the buying division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to negotiate and make
decisions on their own, will a transfer probably take place?
Complete this question by entering your answers in the tabs below.
Required 1A
Required 1B
Required 1C
What is the lowest acceptable transfer price from the perspective of the selling division?
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