Durham Corporation has a Motor Division that produces motors of various types. The company's Machine Products Division has asked the Motor Division to provide it with 20,000 special motors each year on a continuing basis. The special motors would require $100 per unit in variable production costs. The Machine Products Division has a bid from an outside supplier of SI 19 per unit for the motors. In order to have time and space to produce the new motors. the Motor Division would have to cut back production of another motor. the RX] 00, which it presently is producing. The RX100 sells for $130 per unit. and requires $102 per unit in variable production costs. Boxing and shipping costs ofthe RX100 are 510 per unit. Boxing and shipping costs for the new special casting would be only 3? per unit. The company is now producing and selling l00.000 units ofthe RX100 each year. Production and sales ofthis motor would drop by 20% if the new motor is produced. 1. What is the minimum acceptable transfer price per unit that the Motor Division would accept from the Machine Products Division\"? a) 3100 b) s 1 :2 c) 3125 d) 3107' What is the maximum price that the Machine Products Division would be willing to pay per unit to the Motor Division for the special motor? a} 3130 b} 3100 c) 3126 d) 31 19 1What is the effect on the Net Income of Durham Corporation if this transfer does take place at the minimum acceptable transfer price per unit that Motor Division would accept for this special motor? a} Income will increase by $90,000 b} Income will decrease by 390.000 c) Income will decrease by 5130.000 d) Income will increase bv $120,000