22-30 Goal-congruence problems with cost-plus transfer-pricing methods, dual-pricing system (continuation of 22-29). Assume that Pat Borges, CEO of Cranergy, had mandated a transfer price equal to 150% of full cost. Now he decides to decentralize some management decisions and sends around a memo that states the following: Effective immediately, each division of Cranergy is free to make its own decisions regarding the purchase of direct materials and the sale of finished products." 1. Give an example of a goal-congruence problem that will arise if Cranergy continues to use a transfer price of 150% of full cost and Borges's decentralization policy is adopted. 2. Borges feels that a dual transfer pricing policy will improve goal congruence. He suggests that trans- fers out of the harvesting division be made at 150% of full cost and transfers into the processing divi- sion be made at market price. Compute the operating income of each division under this dual transfer- pricing method when 420,000 pounds of cranberries are harvested during June 2014 and processed into juice. 3. Why is the sum of the division operating incomes computed in requirement 2 different from Cranergy's operating income from harvesting and processing 420,000 pounds of cranberries? 4. Suggest two problems that may arise if Cranergy implements the dual transfer prices described in requirement 2