ctions Garcon Inc. Divisional Income Statements For the Year Ended December 31, 20Y2 Consumer Division Commercial Division Total Sales: 14,400 units $144 per unit $2,073,600.00 $2,073,600.00 21,600 units $275 per unit $5,940,000.00 5,940,000.00 Total sales $2,073,600.00 $5,940,000.00 $8,013,600.00 xpenses Variable: 14.400 units $104 per unit $1,497,600.00 $1,497,600.00 21.600 units $193 per unit $4,168,800.00 4.168.800.00 Fored 200,000.00 $20,000.00 720,000.00 Total expenses $1,697,600.00 $4,688,800.00 $6.586,400.00 Income from operations $376,000.00 $1.251.200.00 $1.627200.00 uctions W Ou Division Division Sales 14,400 units $144 per unit $2,073,600.00 $2,073,600.00 21,600 units $275 per unit $5,940,000.00 5,940,000.00 Total sales $2,073,600.00 $5.940,000.00 $8,013,600.00 Expenses: Variable 14.400 units $104 per unit $1497/600.00 $1.497600.00 21,600 units $193 per unit $4.168.800.00 4168.800.00 Fixed 200,000.00 $20,000.00 Total expenses $1,697600.00 $4.688.800.00 36.386,400,00 Income from operations $376,000.00 $1.951.200.00 31.627.200.00 $150 of the $183 per unit represents matenals costs, and the remaining $43 per unit represents other variable conversion expenses incurred within the Commercial Division The Consumer Division is presently producing 14,400 units out of a total capacity of 17,280 units. Materials used in producing the Commercial Division's $150 of the $193 per unit represents materials costs, and the remaining $43 per unit represents other variable conversion expenses incurred within the Commercial Division The Consumer Division is presently producing 14,400 units out of a total capacity of 17,280 units. Materials used in producing the Commercial Divisio product are currently purchased from outside suppliers at a price of $150 per unit. The Consumer Division is able to produce the materials used by the Commercial Division. Except for the possible transfer of materials between divisions, no changes are expected in sales and expenses. Required: 1. Would the market price of $150 per unit be an-appropriate transfer price for Garcon Inc.? Explain. 2. If the Commercial Division purchases 2,880 units from the Consumer Division, rather than externally, at a negotiated transfer price of $115 per unit, how much would the income from operations of each division and the total company income from operations increase? 3. Prepare condensed divisional income statements for Garcon Inc. based on the data in Requirement 2 4. If a transfer price of $126 per unit is negotiated, how much would the income from operations of each division and the total company income from operations increase? 5a. What is the range of possible negotiated transfer prices that would be acceptable for Garcon Inc.? 5b. Assuming that the managers of the two divisions cannot agree on a transfer price, what price would you suggest as the transfer price? lea Divisional Income Statements Sales: 3 14,400 units 2,880 units 21,600 units Total sales Expenses Garcon Inc. Divisional Income Statements For the Year Ended December 31, 20Y2 Score: 0/97 Consumer Division Commercial Division Total roach m. ompany lea Divisional Income Statements Total sales 7 Expenses Variable: 17280 units 10 2,880 units 11 18,720 units 12 Fixed 1 Total expenses 14 Income from operations om 4. If a transfer price of $126 per unit is negotiated, how much would the income from operations of each division and the total company income from operations increase? The Consumer Division's income from operations would increase by The Commercial Division's income from operations would increase by Points: Points: 0/1 Garcon Inc.'s total income from operations would increase by 5b. Assuming that the managers of the two divisions cannot agree on a transfer price, what price would you ggest as the transfer price