Problem 2 West Industries is a highly decentralized corporation With independent operating divisions. Each division is evaluated and rewarded based on its total net income. One division, Visic, manufacture and sell air conditioners. It is projecting a sales forecast of 17,400 for next year. Another division, Weber, makes and sells compressors. Its projected income statement for next year is: Weber Division Pro Forma Income Statement for next year Per Unit Totals Sales revenues $100 $6,400,000 Less cost of goods sold: Direct materials 12 768,000 Direct labour 8 512,000 Variable overhead 10 640,000 Fixed overhead 1 1 704,000 41 2,624,000 Gross profit 59 3,776,000 Operating expenses: Variable selling expenses 6 384,000 Fixed selling expenses 4 256,000 Fixed administrative expenses 7 448,000 Total operating expenses 17 1,088,000 Pre-tax net income $42 $2,688,000