$=
Question
Help
Europa,
Inc.,
has
two
divisions,
A
and
B,
that
manufacture
expensive
bicycles.
Division
A
produces
the
bicycle
frame,
and
division
B
assembles
the
rest
of
the
bicycle
onto
the
frame.
There
is
a
market
for
both
the
subassembly
and
the
final
product.
Each
division
has
been
designated
as
a
profit
center.
The
transfer
price
for
the
subassembly
has
been
set
at
the
long-run
average
market
price.
The
following
data
are
available
for
each
division:
(Click
to
view
the
data.)
Read
the
requirements.
Requi
t
1.
Should
transfers
be
made
to
division
B
if
there
is
no
unused
capacity
in
division
A?
Is
the
market
price
the
correct
transfer
price?
Show
your
computations.
Begin
by
calculating
the
gain
or
loss
if
transfers
are
made
to
division
B
when
there
is
no
unused
capacity
in
division
A.
Select
the
formula
you
will
use
and
enter
the
amounts.
(Use
parentheses
or
a
minus
sign
for
a
loss.)
|
Incremental
revenue
|
-
|
Incremental
cost
|
=
Gain
(loss)
from
transfer
|
120
=
170
|
=
(50)
Should
transfers
be
made
to
division
B
if
there
is
no
unused
capacity
in
division
A?
Select
the
formula
you
will
use
to
calculate
the
correct
transfer
price.
[
Incremental
costperunit
|
+
|
Opportunity
cost
per
unit
|
Minimum
transfer
price
|
80
|
+
|
80
|
=
160
Is
the
market
price
the
correct
transfer
price?
