Airo Corporation has two divisions. The mining division makes toldine, which is then transferred to the metals division. The toldine is further processed by the metals division and is sold to customers at a price of $170 per unit. The mining division is currently required by Airo to transfer its total yearly output of 245,000 units of toldine to the metals division at 110 % of full manufacturing cost. Unlimited quantities of toldine can be purchased and sold on the outside market at $85 per unit. The following table gives the manufacturing cost per unit in the mining and metals divisions for 202x: 28 Mining Division Metals Division Direct material cost $13 $14 Direct manufacturing labor cost 22 Manufacturing overhead cost 25a 40b Total manufacturing cost per unit $60 $82 a Manufacturing overhead costs in the mining division are 20% fixed and 80% variable. Manufacturing overhead costs in the metals division are 65% fixed and 35% variable 1. Calculate the operating incomes for the mining and metals divisions for the 245,000 units of toldine transferred under the following transfer-pricing methods: (a) market price and (b) 110% of full manufacturing cost. Suppose Airo rewards each division manager with a bonus, calculated as 3% of division operating income (if positive). What is the amount of bonus that will be paid to each division manager under the transfer pricing methods in requirement 1? Which transfer pricing method will each division manager prefer to use? 2