Mr. Bailey has prepared the following divisional income statement for you to review, assuming no transfer of excess capacity hours occurs. He has also included the total amounts for BOR CPAs, Inc. in the rightmost column. Complete the following Divisional Income Statements with your data from the Payroll. BOR CPAs, Inc. Divisional Income Statements For the Year Ended December 31, 20Y8 Audit Division Tax Division Total Company Fees earned: $900,000 $900,000 708,750 $708,750 0 Audit fees (12 engagements) Tax fees (45 engagements) Transfer pricing fees Expenses: Variable: Audit hours provided by Audit Division (216,000) (283,500) (48,000) (216,000) (283,500) (48,000) 0 0 Tax hours provided by Tax Division Excess capacity hours paid to salaried starr Audit hours provided by Tax Division Fixed expenses Operating income before support department allocations Support department allocations for payroll (50,000) $634,000 (65,500) $311,750 (115,500) $945,750 Operating income Feedback Check My Work Include your answers from the Payroll on the appropriate line of the Divisional Income Statements. Market Transfer Price Mr. Bailey asks that you prepare Divisional Income Statements showing what 20 results would have been had the Audit Division purchased all the excess Market Transfer Price Mr. Bailey asks that you prepare Divisional Income Statements showing what 20Y8 results would have been had the Audit Division purchased all the excess capacity of the Tax Division, using a market transfer price. The divisional managers tell you that, with the excess capacity of the Tax Division of 800 hours, the Audit Division can perform 4 more audits during the year, and the Tax Division would charge the Audit Division the market rate of $110 per hour for the additional hours required, selling all its excess capacity to the Audit Division. The Tax Division would still be responsible for paying the salaries of their employees. Complete the following Divisional Income Statements. If there is no amount or an amount is zero, enter "0" BOR CPAs, Inc. Divisional Income Statements For the Year Ended December 31, 2048 Audit Division Tax Division Total Company Fees earned: $1,200,000 Audit fees (16 engagements) Tax fees (45 engagements) Transfer pricing fees $1,200,000 708,750 $708,750 Expenses: Variable: (216,000) (216,000) (283,500) (283,500) Audit hours provided by Audit Division Tax hours provided by Tax Division Excess capacity hours paid to salaried starr Audit hours provided by Tax Division Fixed expenses (50,000) (65,500) (115,500) Operating income before support department allocations Support department allocations for payroll Operating income Feedback Check My Work Compute the price charged by the Tax Division to the Audit Division, and both the transfer pricing fees and cost to the Tax Division of the sale of its excess hours. Be sure to revise the Total Company, Operating income before support department allocations, and Operating income totals using your revised amounts Negotiated Transfer Price M. Bailey asks that you prepare Divisional Income Statements showing what 2018 is would have been had the Audit Division purchased all the excess capacity of the Tax Division, using a negotiated transfer price. The divisional managers tell you that with the capacity of the Tax Division of 800 hours, the Audit Division can performer audits during the year, and the Audit Division would agree to a negotiated rate of $90 per hour to be paid to the Tax Division for the additional hours required, with the Tax Division selling all its es capacity to the Audit Division. The Tax Division would still be responsible for paying the salaries of the employees Complete the following Divisional Income Sams. If there is no amount or an amount is bar BOR CPAs, Inc. Divisional Income Statements For the Year Ended December 31, 20YS Audit Division Tax Division Total Company Faasaad: Audit lees (16 angements) $1,200,000 $1,200.000 Taxes (45 namants $708,750 708,750 Transfer pricing Exper: (216,000) (216,000) (283,500) (283,500) Audit hours provided by Audit Division Tax hours provided by Tax Division Excess capacity hours paid to salaried star Audit hours provided by Tax Division Finder Operating income before suport department locations Support department locations for payroll Operating income (50,000) (65.500) (115,500) Feed Check My Compute the price charged by the Tax Division to the Audit Division, and both the trans-pricing fous and cost to the Tax Division of the sale of its ass hours. Be sure to revise the Total Company, Operativo come before support department locations, and operating income taking your revised amounts Cost Transfer Price M. Bailey asks that you prepare Divisional Income Statements showing what 2018 is would have been had the Audit Division purchased all the excess capacity of the Tax Division, using a cost transfer price. The divisional managerstel you that, with the capacity of the Tax Division of 800 hours, the Audit Division can parem 4 more audits during the year, and the Audit Division would pay the Tax Division's internal hourly rate of $50 per hour for the additional hours required, with the Tax Division selling all its exos capacity to the Audit Division. The Tax Division would still be responsible for paying the salaries of their employed Complete the following Divisional Income Stats. If there is no amount or an amount inter BOR CPAs, Inc Divisional Income Statements For the Year Ended December 31, 2048 Audit Division Tax Division Total Company Feed: Audit lees (16 dagement) $1,200,000 $1,200.000 Tax fees (45 engagements) $708,750 708,750 Transfer pricing fees Experts Variable Audit hours provided by Audit Division (216,000) (216,000) Tax hours provided by Tax Division (283,500) (283,500) Exciscapacity hors paid to salaried stall Audit hours provided by Tax Divin Finder 150,000) (65,500) (115,500) Operating income before suport department locations Support department locations for payrol Operating income Feed Check v Compute the price charged by the Tax Division to the Audit Division, and both the transfer pricing and cost to the Tax Division of the sale of its shours. Be sure to revise the total corrigirty, partito come before Support dupa wodation, and Operating incomoting your vised amounts