25. Pete's Paint Company produ Company produces paint and has two divisions: Consumer and Commercial. Each division manager is evaluated based on produced by each division The Commercial division sells paint to the consumer division for 12 gallon to cover variable costs. The Commstrial division also sells to outside customers for $15 per gallon, Required: sing the general economic transfer pricing rule, calculate the optimal transfer price assuming the Commercial division is below capacity. b. Using the general economic transfer pricine rule calculate the optimal transfer price assuming the Commercial division is at capacity. (10 Points) Short Answer 24. Titus Inc, has two divisions - Southeast and Northwest. Titus Ine. Segmented Income Statements For the Current Fiscal Year Ended December 31 Sales Cost of goods sold Gross margin Allocated overhead (from corporate) Selling and administrative expenses Operating income Income tax expense (35%) Net income Southeast Division S4.400,000 2.400.000 2,000,000 600,000 430,000 830,000 290.500 S_539,500 Northwest Division $2,600,000 1.500.000 1,100,000 370.000 340.000 390,000 136,500 $_253.500 Required: (1) Using the segmented income statements presented, determine the profit margin ratio for each division. (2) Assume the Southeast division had average operating assets totaling S6,000,000 for the year, and the Northwest division had average operating assets totaling $1,800,000. Calculate return on investment (ROI) for each division. Assume Titus has a cost of capital rate of nine percent. Calculate residual income for cach division. (18 Points)