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Harvesting Division Processing Division Variable cost per kilogram of cranberries $ 0.0600 Variable processing cost per litre of juice produced $ 0.32 per litre Fixed cost per kilogram of cranberries $ 0.23 Fixed cost per litre of juice produced 0.47 per litre Selling price per kilogram of cranberries 0.55 Selling price per litre of juice produced 1.95 per litre1. Compute Cranergy's operating income from harvesting 340,000 kilograms of cranberries during June 2015 and processing them into juice. 2. Cranergy rewards its division managers with a bonus equal to 4% of operating income. Compute the bonus earned by each division manager in June 2015 for each of the following transfer-pricing methods: a. 175% of full cost b. Market price 3. Which transfer-pricing method will each division manager prefer? How might Cranergy resolve any conflicts that may arise on the issue of transfer pricing?Cranergy Products is a cranberry cooperative that operates two divisions: a harvesting division and a processing division. Currently, all of harvesting's output is converted into cranberry juice by the processing division, and the juice is sold to large beverage companies that produce cranberry juice blends. The processing division has a yield of 2,200 litres of juice per 1,000 kilograms of cranberries. Cost and market price data for the two divisions are as follows: (Click the icon to view the division data.) Required Requirement 1. Compute Cranergy's operating income from harvesting 340,000 kilograms of cranberries during June 2015 and processing them into juice. (Round your answers to the nearest whole dollar. Use a minus sign or parentheses for any operating losses.) Revenues Costs Harvesting Division Variable costs Fixed costs Total Harvesting Division costs Processing Division Variable costs Fixed costs Total Processing Division costs Total costs Operating income (loss) Requirement 2. Cranergy rewards its division managers with a bonus equal to 4% of operating income. Compute the bonus earned by each division manager in June 2015 for each transfer-pricing method, (a) 175% of costs and (b) market price. (Round the revenue per kilogram to four decimal places. Round final answers to the nearest whole dollar. If the bonus is negative, enter a zero, since no bonus would be paid. Use a minus sign or parentheses for any operating losses.)175% of Full Costs Market Price Harvesting Division: Revenues Costs Division variable costs Division fixed costs Total Division costs Division operating income Division manager's bonusProcessing Division: Revenues Costs Transferred-in costs Division variable costs Division fixed costs Total Division costs Division operating income Division manager's bonusRequirement 3. Which transfer-pricing method will each division manager prefer? How might Cranergy resolve any conflicts that may arise on the issue of transfer pricing? The harvesting division manager will prefer to transfer at The processing division manager will prefer to transfer at Cranergy may resolve or reduce transfer pricing conflicts by: market price O A. Basing division managers' bonuses on overall Cranergy profits in addition to division operating income. 175% of full costs O B. Using dual transfer prices since it does not benefit the company to have the harvesting division control costs since it does not pro O C. Requiring the two divisions to negotiate the transfer price between themselves every accounting period. O D. None of the above are correct. O E. A, B, and C are all correct.O A. Basing division managers' bonuses on overall Cranergy prots in addition to division operating income. 0 B. Using dual transfer prices since it does not benet the companvto have the harvesting division control costs since it does not produce the end product. 0 C. Requiring the two divisions to negotiate the transfer price between themselves every accounting period. 0 D. None of the above are correct. @ E. A, B, and C are all correct