Aa Aa E 8. Negotiated price approach to transfer pricing In transfer pricing, if the negotiated transfer price is greater than the variable cost and less than the current market price of the product, which of the following statements is true? O Total company profit will increase by the same amount regardless of the actual transfer price, while each division's increase in profit will depend on the negotiated price. O Total company profit cannot increase when one division purchases goods from another division. O Total company profit will increase regardless of the actual transfer price, but the amount of the increase will depend on the negotiated price. O The company will not benefit by the purchasing division purchasing from the selling division. The Louisville Division of Lewis Company makes a motor that the Memphis Division uses in the assembly of a machine. The Louisville Division currently makes only the amount it can 56,000 motors each year-but it has the capacity to make a total of 70,000 motors each year. The variable cost of producing the motors is $63 per unit. The current market price to outside customers is $90. The Memphis Division is currently purchasing 14,000 motors each year from an outside source at $90 per unit The management of the two divisions recently negotiated a transfer price of $72 per unit for 14,000 units. How much will each division's income increase as a result of this transfer, and how much will the income of the overall company increase? Increase in Income Louisville Division Memphis Division Lewis Company