$1.($W$)$ Eastern Company $\text{'}$s Income Statement with no transfers between divisions are as follows. $($Division A$\_$Supplying Division, Division B$\_$Demanding Division, Company as a whole$)$

Eastern Inc.

Income Statement

For the year Ended Dec. $2023$

$*\backslash (\backslash$$ $30=\backslash$$ $20(\backslash )$ material cost$)+$ other variable conversion cost incurred in division B

Instructions$)$

$($a$)$ Assume that Division B currently purchased intermediate products from outside suppliers at $20$ per unit. If Division A operate at the full capacity, What is optimal transfer price?

$($b$)$ Assume that Division B currently purchased intermediate products from outside suppliers at $20$ per unit. and Division A operate under the full capacity.

If Division B needs $20,000$ units and transfer price is set at $\backslash (\backslash$$ $15\backslash ),$ calculate the income from operations of division $\backslash (\backslash$mathrm$\{$A$\},\backslash$mathrm$\{$B$\}\backslash )$ and company as a whole.

$($c$)$ Assume that Division B currently purchased from outside suppliers at $20$ per unit. and Division A operate under the full capacity.

If Division B needs $20,000$ units and transfer price is set at $\backslash (\backslash$$ $20\backslash ),$ calculate the income from operations of division A$,$ B and company as a whole.

$($d$)$ Explain the range of the negotiated transfer price between division A and B for maximizing income of company as a whole.