QUESTIUNI - TU MAJ Pic-chore Industries has several independent divisi stries has several independent divisions. The company's Tube Division manufactures a picture tube used in television sets. The Tube Divisie o television sets. The Tube Division's income statement for last year, in which 8,000 tubes were sold (capacity), is given below: Total Sales .. $1,360,000 Less cost of goods sold.. 840,000 Gross margin......... 520,000 Less selling and administrative expenses...... 390.000 Divisional operating income..... $130.000 Unit $170.00 105.00 65.00 48.75 $16.25 As shown above, it costs the Tube Division $105 to produce a single tube. This fiqure consists of the following costs: Direct materials.... Direct labour..... Manufacturing overhead (75% fixed)............ Total cost per tube.......... $38 27 40 $105 The Tube Division has fixed selling and administrative expenses of $350,000 per year. Pic-chore Industries has just formed a new division, called the TV Division, that will produce a television set that requires a high-resolution picture tube. The Tube Division has been asked to manufacture 3,000 of these tubes each year and sell them to the TV Division. As one step in determining the price that should be charged to the TV Division, the Tube Division has estimated the following cost for each of the new high resolution tubes: $60 49 Direct materials... Direct labour.. Manufacturing overhead (2/3 fixed).... Total cost per tube. 54 $163 To manufacture the new tubes the Tube Division would have to reduce production of its regular tubes by 3,000 units per year. There would be no variable selling and administrative expenses on the intra- company transfer, and total fixed overhead costs would not change. (4) REQUIRED: 1. Determine the price that the Tube Division should charge the TV Division for each on high-resolution tubes. 2. Assume that the TV Divi me that the TV Division has found an outside supplier that will provide the new tubes for only $200 each. If the TV Division purchased externally, what Will DE DIVISION purchased externally, what will be the effect on the profits of the company as a whole