QUESTION TWO [25] Tap Co. is a company specializing in the manufacture and sale of Taps. Each Tap consists of a main unit plus a set of Tap fittings. The company is split into two divisions, A and B. Division A manufactures the tap and Division B manufactures sets of tap fittings, Currently, all of Division A's sales are made externally. Division B, however, sells to Division A as well as to external customers. Both of the divisions are profit centres. The following data are available for both divisions: The transfer price charged by Division B to Division A was negotiated some years ago between the previous divisional managers, who have now both been replaced by new managers. Head office only allows Division A to purchase its fittings from Division B, although the new manager of Division A believes that he could obtain fittinqs of the same quality and Kequired: 2.1 Under the current transfer pricing system, prepare a profit statement showing the profit for each of the divisions and for Tap Co. as a whole. Your sales and costs figures should be split into external sales and interdivisional transfers, where appropriate. (14) QUESTION TWO [25] Tap Co. is a company specializing in the manufacture and sale of Taps. Each Tap consists of a main unit plus a set of Tap fittings. The company is split into two divisions, A and B. Division A manufactures the tap and Division B manufactures sets of tap fittings, Currently, all of Division A's sales are made externally. Division B, however, sells to Division A as well as to external customers. Both of the divisions are profit centres. The following data are available for both divisions: The transfer price charged by Division B to Division A was negotiated some years ago between the previous divisional managers, who have now both been replaced by new managers. Head office only allows Division A to purchase its fittings from Division B, although the new manager of Division A believes that he could obtain fittinqs of the same quality and Kequired: 2.1 Under the current transfer pricing system, prepare a profit statement showing the profit for each of the divisions and for Tap Co. as a whole. Your sales and costs figures should be split into external sales and interdivisional transfers, where appropriate. (14)