Q41.

Exercise 9-19 (Static) Determining transfer prices LO C1 The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a market price of $200 each. Each traller incurs $80 of variable manufacturing costs. The Trailer division has capacity for 40,000 trailers per year and has fixod costs of $1,000,000 per year: 1. Assume the Assembly division of Baxter Bicycles wants to buy 15,000 trallers per year from the Trailer division. If the Trailer division can sell all of the trailers it manufactures to outside customers (and has no excess capacity), what price should be usec on transfers between divisions? 2. Assume the Traller division currently only sells 20,000 trailers to outside customers and has excess capacity. The Assembly division wants to buy 15,000 trailers per year from the Trailer division. What is the range of acceptable prices on transfers between divisions