ABC miners operates two divisions, one in Japan and other in United Kingdom (U.K.). Mining Division is operated in Japan which is rich in raw emerald. The other division is United Kingdom Processing Division. It processes the raw emerald into polished stone fit for human wearing. The cost details of these divisions are as follows: Division Japan Mining Division United Kingdom Processing Division Per carat of raw emerald Per carat of polished emerald Variable Cost 2,500 Yen 150 Pound Fixed Cost 5,000 Yen 350 Pound Several polishing companies in Japan buy raw emerald from other local Mining Companies at 9,000 Yen per carat. Current Foreign Exchange Rate is 50 yen = 1 Pound. Income Tax rates are 20% and 30% in Japan and the United Kingdom respectively. It takes 2 carats of Raw Yellow emerald to yield 1 carat of Polished Stone. Polished emerald sell for 3,000 Pounds per carat. ABC miners operates two divisions, one in Japan and other in United Kingdom (U.K.). Mining Division is operated in Japan which is rich in raw emerald. The other division is United Kingdom Processing Division. It processes the raw emerald into polished stone fit for human wearing. The cost details of these divisions are as follows: Division Japan Mining Division United Kingdom Processing Division Per carat of raw emerald Per carat of polished emerald Variable Cost 2,500 Yen 150 Pound Fixed Cost 5,000 Yen 350 Pound Several polishing companies in Japan buy raw emerald from other local Mining Companies at 9,000 Yen per carat. Current Foreign Exchange Rate is 50 yen = 1 Pound. Income Tax rates are 20%

Required COMPUTE the transfer price for 1 carat of raw emerald transferred from Mining Division to the Processing Division under two methods 200% of Full Costs and (b) Market Price1,000 carats of raw emerald are mined by the Japan Mining Division and then processed and sold by the U.K. Processing Division. COMPUTE the after tax operating income for each division under both the Transfer Pricing Methods stated above in (i).