. What is the minimum transfer price that the Engine Division should accept? ______________ 15. What is the increase/decrease in overall company profits if this transfer takes place? ______________ 16. If Engine Division has enough excess capacity to provide the requirement of Production Division, what is the minimum transfer price that the Engine Division should accept? ______________ 17. What is the maximum transfer price that the Production Division would be willing to accept?
Tuttle Motorcycles Inc. manufactures and sells high-priced motorcycles. The Engine
Division produces and sells engines to other motorcycle companies and internally to the
Production Division. It has been decided that the Engine Division will sell 30,000 units to the
Production Division. The Engine Division, currently operating at capacity, has a unit sales price of
P1,800 and unit variable costs and fixed costs of P700 and P500, respectively. The Production
Division is currently paying P1,600 per unit to an outside supplier. P180 per unit can be saved on
internal sales from reduced selling expenses.
14. What is the minimum transfer price that the Engine Division should accept? ______________
15. What is the increase/decrease in overall company profits if this transfer takes place?
______________
16. If Engine Division has enough excess capacity to provide the requirement of Production
Division, what is the minimum transfer price that the Engine Division should accept?
______________
17. What is the maximum transfer price that the Production Division would be willing to accept?
______________
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