Delta Footwear Ltd. manufactures only one type of sandal and has two divisions, the Sole Division, and the Assembly Division. The Sole Division manufactures soles for the Assembly Division, which completes the sandal and sells it to retailers. The Sole Division "sells" soles to the Assembly Division. The market price for the Assembly Division to purchase a pair of soles is $18. (Ignore changes in inventory.) The per unit fixed costs are based on a production of 50,000 pairs of sandals.

Sole's costs per pair of soles

are:

Direct materials	$5
Direct labour	$4
Variable overhead	$3
Division fixed costs	$1

Assembly's costs per completed pair of sandals

are:

Direct materials	$6
Direct labour	$3
Variable overhead	$2
Division fixed costs	$2

Assume the transfer price for a pair of soles is 150% of total costs of the Sole Division and 40,000 of soles are produced and transferred to the Assembly Division. The Sole Division's operating income is

A.$260,000.

B.$300,000.

C.$250,000.

D.$400,000.

E.$248,000.

2) If the Assembly Division sells 100,000 pairs of sandals at a price of $35 a pair to customers, what is the company's operating income?

A.$1,400,000

B.$2,200,000

C.$1,950,000

D.$900,000

E.$1,050,000