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Tulip Company is made up of two divisions: A and B. Division A produces a widget that Division B uses in the production of its product. Variable cost per widget is $1.70; full cost is $2.90. Comparable widgets sell on the open market for $3.60 each. Division A can produce up to 3.30 million widgets per year but is currently operating at only 50 percent capacity. Division B expects to use 165,000 widgets in the current year.

Required:

1.Determine the minimum and maximum transfer prices.

2.Calculate Tulip Company's total benefit of having the widgets transferred between these divisions.

3.If the transfer price is set at $1.70 per unit, determine how much profit Division A will make on the transfer. Determine how much Division B will save by not purchasing the widgets on the open market.

4.If the transfer price is set at $3.60 per unit, determine how much profit Division A will make on the transfer. Determine how much Division B will save by not purchasing the widgets on the open market.

5.What transfer price would you recommend to split the difference?

Required 1 Required 2 Required 3 Required 4 Required 5 Determine the minimum and maximum transfer prices. (Enter your answers to 2 decimal places.) Minimum Transfer Price Maximum Transfer Price Required 1 Required 2 Required 3 Required 4 Required 5 Calculate Tulip Company's total benefit of having the widgets transferred between these divisions. Total Benefit Required 5 Required 1 Required 2 H Required 3 Required 4 If the transfer price is set at $1.7 per unit, determine how much prot Division A will make on the transfer. Determine how much Division B will save by not purchasing the widgets on the open market. (Round your answers to 2 decimal places.) Division A Prot Division B Savings Required 1 Required 2 Required 3 Required 4 Required 5 If the transfer price is set at $3.60 per unit, determine how much prot Division A will make on the transfer. Determine how much Division B will save by not purchasing the widgets on the open market. (Round your answers to 2 decimal places.) Division A Pr01it Division B Savings Required 1 Required 2 Required 3 Required 4 Required 5 What transfer price would you recommend to split the difference? (Round your answer to 3 decimal places.)

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