Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company's planning budget for May appears below: Puget Sound Divers
Planning Budget
For the Month Ended May 31

Budgeted diving-hours (q) . 100
Revenue ($365.00q) , . 36,500
Expenses:
Wages and salaries ($8,000 + $125.00q) . 20,500
Supplies ($3.00q) . 300
Equipment rental ($1,800 + $32.00q) . 5,000
Insurance ($3,400) . 3,400
Miscellaneous ($630 + $1.80q) . 810

Total expense .30,010
Net operating income .6490

Required:
During May, the company's activity was actually 105 diving-hours. Prepare a flexible budget for that level of activity.

In each of the cases below, assume division x has a product that can be sold either to outside customers or to division y of the same company for use in its production process. the managers of the divisions are evaluated based on their divisional profits. case a b division x: capacity in units 200,000 200,000 number of units being sold to outside customers 200,000 160,000 selling price per unit to outside customers $ 90 $ 75 variable costs per unit $ 70 $ 60 fixed costs per unit (based on capacity) $ 13 $ 8 division y: number of units needed for production 40,000 40,000 purchase price per unit now being paid to an outside supplier $ 86 $ 74 required: 1. refer to the data in case a above. assume in this case that $3 per unit in variable selling costs can be avoided 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 make decisions on their own, will a transfer probably take place?