The Jordan Company has two divisions and manufactures one type of watch. The two divisions are the production Division and the Package & Delivery Division. The production Division manufactures watches and then sells them to the Package & Delivery Division, which packs the watches and sells them to retailers. The market price for the Package & Delivery Division to purchase this watch is 40.

Productions cost per watch are:
Direct materials	5
Direct labour	7
Variable overhead	5
Division fixed cost	3

Package & Deliverys cost per watch are:
Direct materials	8
Direct labour	4
Variable overhead	5
Division fixed cost	15

Notes: Fixed costs shown above are per pair for 100,000 units.

Required:

a) If the Package & Delivery Division purchases 100,000 watches from production departments and sells to retailers at a price of 160 per watch, what is the operating income of the Jordan Company?