Cost accounting: transfer pricing: Please solve this problem

Transfer Pricing S 2018 Trevorco has two divisions: Brownies and Brownie Sundaes. Meishan is the manager of the Brownie Division and Rotesh is the manager of the Brownie Sundae Division r of the company, is trying to develop a transfer pricing system that will instill GOAL CONGRUENCE in Meishan and Rotesh, who get bonuses based on their segment income. The following information is available Brownie Sundae Division Brownie Division Sales/Market Price Variable costs S2 per brownie S0.50 per brownic $4 per brownie sundae $0.75 per sundae- excluding cost of brownie (one brownie in each sundae) Fixed Costs Items sold to outside market Capacity $300 per month 3,000 per month 4,000 brownics/month $500 per month 800 per month Create Contribution-Format income statements for both divisions and Trevorco in total, assuming Rotesh buys brownies from outside suppliers 1. 2. Assuming there are no cost savings associated with Meishan selling directly to Rotesh, what is the LOWEST transfer price Meishan should charge? What is the HIGHEST price Meishan should charge 3. Using your answers to 2., create two Contribution-Format income statements for both divisions and Trevorco in total. Which transfer price will Meishan prefer? Which will Rotesh prefer? Also, create income statements assuming a transfer price of $0.25 and a transfer price of $3.00. What impact do these prices have on Trevorco? Would Meishan and Rotesh agree to these prices? 4. Does Trevor care whether Rotesh buys brownies from Meishan or from the outside? How will he encourage Rotesh to do what is best for the whole company? If you were Trevor, what transfer price would you suggest? Why? Create an income statement using this recommended transfer price 5. Assume that Meishan has been selling 3,500 brownies to outsiders each month Create two sets of income statements, one with Rotesh buying 800 brownies from Mcishan for $1.00 each and one with Rotesh buying the brownies from an outside supplier. Which would Trevorco prefer? Which would Meishan prefer? Which would Rotesh prefer? How can Trevor encourage Meishan and Rotesh to do what is best for Trevorco as a whole? Create income statements that support your suggestions