No Transfer 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, 2048 Audit Division Tax Division Total Company $900,000 $708.750 $900,000 709,750 . (180,000) Fees earned: Audit rees (12 engagements) Tax fees (45 engagements) Transfer pricing fees Expenses Variable Audit hours provided by Audit Division Tax hours provided by Tax Division Excess capacity hours paid to salaried stall Audit hours provided by Tax Division Fixed expenses Operating income before support department allocations Support department allocations for payroll Operating income (236,250) (40,000) 0 (65,500) $367.000 (180,000) (256,250) (40,000) 0 (115.500) $1,037,000 50.000) 5670,000 Market Transfer Price Mr. Bailey asks that you prepare Divisional Income Statements showing what 2048 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 "O". BOR CPAs, Inc. Divisional Income Statements Chapter 24 Mastery (Mastery) (180,000) 1180.0001 1236,2503 (236,250) Expenses: Variable: Audit hours provided by Audit Division Tax hours provided by Tax Division Excess capacity hours paid to salaried staff Audit hours provided by Tax Division Fixed expenses Operating income before support department locations Support department allocations for payroll Operating income (50,000) (65,500) 115.500) Cost Transfer Price Mr. Bailey asks that you prepare Divisional Income Statements showing what 2078 results would have been had the Audit Division purchased all the excess capacity of the Tax Division, using a cost 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 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 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 "O". BOR CPAs, Inc. Divisional Income Statements For the Year Ended December 31, 2048 Audit Division Tax Division Total Company $1,200,000 $1.200.000 700.750 $700.750 (180,000) Fees earned Audit fees (16 engagements) Tax fees (45 engagements) Transfer pricing fees Expenses: Variable: Audit hours provided by Audit Division Tax hours provided by Tax Division Excess capacity hours paid to salaried staff Audit hours provided by Tax Division Fixed expenses Operating income before support department locations Support department allocations for payroll Operating income 160,000) 235.2501 (236,250) (50,000) (65,500) 1115.500 Total Company $1.290.000 708.750 BOR CPAs, Inc. Divisional Income Statements For the Year Ended December 31, 2048 Audit Division Tax Division Fees eamed: Auditrees (16 engagements) $1,200,000 Taxes (45 engagements) $708,750 Transfer pricing fees Expenses Variable Audit hours provided by Audit Division (150.0001 Tax hours provided by Tax Division (236,250) Excess capacity hours paid to salaried staff Audit hours provided by Tax Division Fixed expenses 150,000) (65,500) Operating income before support department allocations Support department locations for payroll Operating income 380,000 1236.250) Negotiated Transfer Price Mr. Bailey asks that you prepare Divisional Income Statements showing what 2048 results 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 excess capacity of the Tax Division of 800 hours, the Audit Division can perform 4 more 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 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 "O". BOR CPAs, Inc. Divisional Income Statements For the Year Ended December 31, 2048 Audit Division Tax Division Total Company $1,200,000 $1,200,000 Fees earned Audit fees (16 engagements) Tax fees (45 engagements Transfer pricing fees Expenses $708,750 700.750