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Bedtime Bedding Company manufactures pillows. The Cover Division makes covers and the Assembly Division makes the finished pillows. The covers can be sold separately for

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Bedtime Bedding Company manufactures pillows. The Cover Division makes covers and the Assembly Division makes the finished pillows. The covers can be sold separately for $5.00. The pillows sell for $6.00. The information related to manufacturing for the most recent year is as follows: Cover Division $6,000,000 $4,000,000 Assembly Division $1,500,000 $7,200,000 Manufacturing costs of division Sales to external parties Market value of covers transferred from the Cover Division to the Assembly Division $6,000,000 Required: a. Compute the operating income for each division and the company as a whole. Use market value as the transfer price. b. Are all managers likely to be happy with this approach? Explain

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