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Amax Corporation has two divisions. The mining division makes toldine, which is then transferred to the metals division. The toldine is further processed by the

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Amax 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 $150 per unit. The mining division is currently required by Amax to transfer its total yearly output of 200,000 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 $90 per unit. The following table gives the manufacturing cost per unit in the mining and metals divisions for 2014: (Click to view the data.) Read the requirements. Requirement 1. Calculate the operating incomes for the mining and metals divisions for the 200,000 units of toldine transferred under the following transfer pricing methods: (a) market price and (b) 110% of full manufacturing cost. Begin with calculating the operating income for the mining division under each method by entering the appropriate amounts, then complete the table for the metal division. Method A Method B Mining division Division revenue Cost: Division variable cost Division fixed cost Total division cost Division operating income Metal division Division revenue Cost: Transferred-in cost Division variable cost Division fixed cost Total division cost Division operating income

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