Required information

Exercise $11-13($Algo$)$ Transfer Pricing Situations $[$LO$11-3]$

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In each of the cases below, assume Division $x$ has a product that can be sold to outside customers or to Division $Y$ of the

same company. The managers of the divisions are evaluated based on their divisional profits.

Exercise $11-13($Algo$)$ Part $2$

Required:

Refer to the data in case $B$ above. In this case, there will be no savings in variable selling costs on intracompany sales.

a$.$ What is the lowest acceptable transfer price from the perspective of the selling division?

b$.$ What is the highest acceptable transfer price from the perspective of the buying division?

c$.$ What is the range of acceptable transfer prices $($if any$)$ between the two divisions? If the managers are free to negotiate and makP

decisions on their own, will a transfer probably take place?

Complete this question by entering your answers in the tabs below.

Required $2A$

Required $2C$

What is the lowest acceptable transfer price from the perspective of the selling division?

Lowest acceptable transfer price