Question 1 Muharraq Co. has Division A that ananifactures and sells a number of parts, including Part XYZ. Data concerning Pan XYZ uppl 10 points Capacity in units Selling price to outside customers Variable cost per unit 20,000 5110 5.25 525 Fixed cost per unit (based on capacity) The company has Division B that could use Part XYZ in one of its products Division B is currently purchasing 15.000 of Part XYZ per year from an oversens spplier ata con of $109 per part. Required: a. Assume that Division A is selling all of Part XYZ it can produce to outside customers. What is the acceptable range, if any, for the transfer price between the two divisions? (4 marks) Assume again that Division A is selling all of Part XYZ it can produce to outside customers. Also assume that $3 in variable expenses can be avoided on transfers within the company: e to reduced shipping and selling costs. What is the acceptable range, if any, for the transfer price between the two divisions? (4 marks] Based on requirement (a), assume Division A offers to sell 15,000 units to Division B for $125 and that Division B refuses this price. What will be the loss in potential profits for ision A? (2 marks] he toolbar, press ALT+F10 (PC) or ALT-FN-F10 (Mac) *** Arial IUS Paragraph 10pt I. ||| Question T Muharreg Co. bas Division A that manufactures and sells a member of parts, including Pan XYZ. Data concoming Pan XYZ appear b 10 points Capacity in units Selling price to outside customers Vartable cost per unit 70,000 5110 3.75 Fixed cost per unit (based on capacity) $25 The company has Division that could use Part XYZ in one of its products Division B is currently purchasing 15,000 of Pari XYZ per year from m overseas applier at $109 per part. Required: a. Assume that Division A is selling all of Part XYZ it can produce to outside customers. What is the acceptable range, if any, for the transfer price between the two divisions? (4 marks) b. Assume again that Division A is selling all of Part XYZ it can produce to outside customers. Also assume that $3 in variable expenses can be avoided en transfers within the company Jue to reduced shipping and selling costs. What is the acceptable range, if any, for the transfer price between the two divisions? (4 marks] Based on requirement (a), assume Division A offers to sell 15.000 units to Division B for $125 and that Division B refuses this price. What will be the loss in potential profas for wision A? [2 marks] the toolbar, press ALT+F10 (PC) or ALT FN F10 (Mac). I. 10pt XQ *** = US Paragraph Arial DELL Question 1 Maheng Co, has Division A tabchures and see a muner of parts, including PXYZ Dacing Fan XYZ spp Caparity in waits Selling price to wide coster Variable rest premi 70.000 3110 $75 Fixed cost per salt (based on capacity) The company has Division B that could use Part XYZ in one of its products. Division B is currently purchasing 15.000 af Put XVZ per year tom verses suppliers of $100 per part Required: a. Assume that Division A is selling all of Part XYZ it can produce to outside customers. What is the acceptable range, if any, Tee the transfer price between the two divisions? (4 marks] b. Assume again that Division A is selling all of Part XYZ it can produce to outside customers. Also assume that 53 in variable expenses can be avoided on transfers within the company due to reduced shipping and selling costs. What is the acceptable range, if any, for the transfer price between the two divisions? [4 marks] c. Based on requirement (a), assume Division A offers to sell 15.000 units to Division B for $125 and that Division B refuses this price. What will be the loss in potential profits for Division A7 [2 marks] For the toolbar, press ALT+F10 (PC) or ALT FN F10 (Mac) BIUS Paragraph ENEM Arial 100t