A3 please help..... Exercise 22-19 (Algo) Determining transfer prices LO C1The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have amarket price of $103 each. Each trailer incurs $35 of variable manufacturing costs. The Trailer division has capacity for 23,000 trailersper year and has fixed costs of $540,000 per year.1. Assume the Assembly division of Baxter Bicycles wants to buy 6,000 trailers per year from the Trailer division. If the Trailer divisioncan sell all of the trailers it manufactures to outside customers (and has no excess capacity), what price should be used on transfersbetween divisions?2. Assume the Trailer division currently only sells 9,400 trailers to outside customers and has excess capacity. The Assembly divisionwants to buy 6,000 trailers per year from the Trailer division. What is the range of acceptable prices on transfers between divisions?1. Transfer price per trailer> Answer is complete but not entirely correct.$35 X2. Transfer price per trailer will be atleast$68 ×but not morethan$103

Step 1: 1) Transfer price per trailer if the division has no excess capacity In intra-division…

Answered: Exercise 22-19 (Algo) Determining…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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