Birrell Scientific Inc. manufactures electronic products, with two operating divisions, the GPS Systems and Communication Systems divisions. Condensed divisional income statements, which involve no intracompany transfers and which include a breakdown of expenses into variable and fixed components, are as follows: Birrell Scientific Inc. Divisional Income Statements For the Year Ended December 31, 20Y5 Communication GPS Systems Division Systems Division Total Sales: 75,000 units @ $60 per unit $4,500,000 $4,500,000 < 155,000 units @ $115 per unit $17,825,000 17,825,000 $4,500,000 $17,825,000 $22,325,000 Expenses: Variable: 75,000 units @ $42 per unit $(3,150,000) $(3,150,000) 155,000 units @ $90 per unit* $(13,950,000) (13,950,000) Fixed 250,000 (500,000) (750,000) Total expenses $(3,400,000) $(14,450,000) $(17,850,000) Operating income $1,100,000 $3,375,000 $4,475,000 *$60 of the $90 per unit represents materials costs, and the remaining $30 per unit represents other variable conversion expenses incurred within the Communication Systems Division. The GPS Systems Division is presently producing 75,000 units out of a total capacity of 150,000 units. Materials used in producing the Communication Systems Division's product are currently purchased from outside suppliers at a price of $60 per unit. The GPS Systems Division is able to produce the materials used by the Communication Systems Division at a variable cost of $42 per unit. Except for the possible transfer of materials between divisions, no changes are expected in sales and expenses. Required: 1. Would the market price of $60 per unit be an appropriate transfer price for Birrell Scientific Inc.? No < 2. If the Communication Systems Division purchases 25,000 units from the GPS Systems Division, rather than externally, at a negotiated transfer price of $52 per unit, how much would the operating income of each division and the total company operating income increase? The GPS Systems Division's operating income would increase by The Communication Systems Division's operating income would increase by Birrell Scientific Inc.'s total operating income would increase by Chaal Mode Next t> 0_F_265 DG5...PC ndlin_Re ne ion for 3350.pdf