Dual Transfer Price System. Aymara Chemical Company, based in La Paz, Bolivia, has two divisions, Positivo and Negativo. The Negativo Division produces a product at a variable cost (in pesos) of \(\$ 310\) per unit and sells 50,000 units to the external market at \(\$ B 15\) per unit and 40,000 units to the Positivo Division at variable cost plus 50 percent. However, under the dual transfer price system in use, the Positivo Division pays only the variable cost per unit. The fixed cost of the Negativo Division is \(\$ B 160,000\) per year.

The Positivo Division sells 40,000 units of its finished product to the external market at \(\$ B 30\) per unit and has a variable cost of \(\$ 88\) per unit in addition to the cost of the subassembly purchased from the Negativo Division at variable cost. The annual fixed cost of the Positivo Division is \(\$ \mathrm{~B} 180,000\).

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Show the income statements for the two divisions and the income statement for the company as a whole. Assume the company consists of only the two divisions. Explain why, under the dual transfer price system, the net income for the company is less than the sum of the net income figures shown for the two divisions.