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1.       Rory Company manufactures goods in Division A that are transferred to Division B for use in its products. Division A’s costs are $25 per unit, plus $10,000,000 in fixed costs. Division B’s costs are $100 per unit, plus the cost of the transferred goods, plus $24,000,000 in fixed costs. Division B needs 200,000 units from Division A per year, which Division A could instead sell on the market for $150 each. Rory sets its transfer prices at full cost plus 5%. Calculate the transfer price.

2.       Obladi, Inc., manufactures 50,000 parts per year in the Parts division, which are transferred to the Finishing division. The Parts division’s costs are $3 per unit, plus $200,000 in fixed costs. The Finishing division’s costs are $20 per unit, plus the cost of the transferred parts, plus $500,000 in fixed costs. The market price for parts is $10. Obladi sets its transfer prices at full cost plus 10%. Calculate the transfer price.

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