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\fDivision B Revenue 2,232,000 Transferred-in costs (1,674,000) Variable costs (89,900) Fixed costs (167,400) Division operating income $ 300,700 Division A Revenue $ 1,674,000 Variable costs (96, 100) Fixed costs (210,000) Division operating income 1,367,9001. Calculate the operating income for Division A using 110% of manufacturing cost as the transfer price. 2. Calculate the operating income for Division A using 110% of market value cost as the transfer price. 3. If bonuses are calculated at 10% of operating income, what method will the manager of Division A prefer (market value or 110% of manufacturing cost)? 4. Comment on the 110% of manufacturing costs compared to the $5.40 market value transfer price. What impacts on behaviours or attitudes might occur within divisions if the company switches from market value to 110% of manufacturing cost?Darselect Strawberry manufactures bottles in its glass Division A, which are then transferred to its packaging Division B. In the upcoming month, 310,000 bottles will be transferred to Division B from Division A, where they are filled and then sold at $7.20 per bottle. The bottles can be sold from Division A to other bottlers at $5.40 per bottle. The costs provided relate to total manufacturing budgeted costs for the 310,000 bottles. (Click the icon to view the costs data.) The operating income for Division A and Division B under the market price transfer-pricing method are provided in the accompanying tables. (Click the icon to view the division operating income.) The manager of Darselect Strawberry has just come back from a transfer-pricing conference where he learned about new methods. Required Requirement 1. Calculate the operating income for Division A using 110% of manufacturing cost as the transfer price. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for a negative operating income.) Division A Revenue Variable costs Fixed costs Division operating income Requirement 2. Calculate the operating income for Division A using 110% of market value cost as the transfer price. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for a negative operating income.) Division A Revenue Variable costs Fixed costs Division operating income Requirement 3. If bonuses are calculated at 10% of operating income. what method will the manager of Division A prefer (110% of market value or 110% of manufacturing cost)?The manager of Division A would prefer the 110% of method because the division operating income would be with this method. Requirement 4. Comment on the 110% of manufactu manufacturing cost? 15.40 market value transfer price. What impacts on behaviours or attitudes might manufacturing cost The 110% of manufacturing cost transfer price is market value value transfer price under the market value method. Division B could see aRequirement 4. Comment on the 110% of manufacturing costs compared to the $5.40 market value transfer price. What impacts on behaviours or attitudes might occur within divisions if the company switches from market value to 110% of manufacturing cost? The 110% of manufacturing cost transfer price is the $5.40 market value transfer price under the market value method. Division B could see a in morale due to a operating income or emphasis on minimizing costs and improving revenues as the division would look due to changing to the market value method. The might happen with Division A if the market value method is used. Division A may decide to E stay within the company. en continue to the next question. split and sell to an outside market