b. What is the minimum transfer price? c. What is the maximum transfer price? 4. Bayfield Division of Ashland Inc. has a capacity of 200,000 units and expects the following results. Sales (160,000 units at P4) P640,000 Variable costs, at P2 (320,000 Fixed costs (260,000) Income P 60,000 Washburn Division of Ashland Inc. currently purchases 50,000 units of a part for one of its products from an outside supplier for P4 per unit. Washburn's manager believes he could use a minor variation of Bayfield's product instead, and offers to buy the units from Bayfield at P3.50. Making the variation desired by Washburn would cost Bayfield an additional P0.50 per unit and would increase Bayfield's annual cash fixed costs by P20,000. Bayfield's Manager agrees to the deal offered by Washburn's Manager. Required: a. Find the effect of the deal on Washburn's income and circle the correct direction. (increase decrease none) b. Find the effect of the deal on Bayfield's income and circle the correct direction. (increase decrease none) c. Find the effect of the deal on the income of Ashland Inc. and circle the correct direction. (increase decrease none) 5. Sandbar Company, a division of Dudge Cars, produces automotive batteries. Sandbar sells the batteries to its customers for P82 per unit. The variable cost per unit is P38, and fixed costs per unit are P16. Top management of Dudge Cars would like Sandbar to transfer 30,000 batteries to another division within the company at a price of P54. Sandbar has sufficient excess capacity to provide the 30,000 batteries to the other division. Required: Compute the minimum transfer price that Sandbar should accept. Sandbar Company, a division of Dudge Cars, produces automotive batteries. Sandbar sells the batteries to its customers for P82 per unit. The variable cost per unit is P38, and fixed costs per unit are P16. Top management of Dudge Cars would like Sandbar to transfer 30,000 special, high- performance batteries to another division within the company. Sandbar's variable cost on these special batteries is P52 per unit. Sandbar is operating at full capacity. Required: Compute the minimum transfer price that Sandbar should accept. 7. Six Top Company is in the process of setting a selling price for its newest model stunt kite, the Powers. The controller of Six Top estimates variable cost per unit for the new model to be as follows