Division A of Spangler Company expects the following results:
Division B has the opportunity to buy its needs of 5,000 units from an outside supplier at $45 each.Assume that Division A cannot increase sales to outsiders.Required:
a.What would be the optimal transfer price?
b.Assume that Spangler allows the divisional managers to negotiate transfer prices.What would the maximum transfer price be?
c.Assume that Spangler allows the divisional managers to negotiate transfer prices.What would the minimum transfer price be?

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The Answer of Division A of Spangler Company expects the following results:
Division B has the opportunity to buy its needs of 5,000 units from an outside supplier at $45 each.Assume that Division A cannot increase sales to outsiders.Required:
a.What would be the optimal transfer price?
b.Assume that Spangler allows the divisional managers to negotiate transfer prices.What would the maximum transfer price be?
c.Assume that Spangler allows the divisional managers to negotiate transfer prices.What would the minimum transfer price be?

Division a of Spangler Company Expects the Following Results