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QUESTION 6 (10 Marks) Leonard Inc. has two divisions for selling printed textbooks: Soft Copy and Hard Copy. The soft copy division makes the textbook

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QUESTION 6 (10 Marks) Leonard Inc. has two divisions for selling printed textbooks: Soft Copy and Hard Copy. The soft copy division makes the textbook and they can be sold to the hard copy division for further premium binding Soft copy textbooks sell for $120 on the open market with variable costs of $48 per unit and fixed costs of $42 per unit. Hard Copy textbooks sellfor $180 on the open market with variable costs of $37 per unit and fixed costs of $23 per unit. There are no further costs to consider for the selling textbooks, REQUIRED: a) Should Leonard Inc as a company sell the textbooks as Soft Copy or send them to the Hard Copy division? Assume no transfer pricing policy. Please fully explain your decision and show your calculations b) Leonard Inc, anticipates selling 20.000 hard copy textbooks Calculate the operating incomes for the Soft Copy textbooks division, the Hard Copy textbooks division, and company as a whole with transfer pricing at 200% of fixed cost C) Leonard Inc now anticipates selling 15.000 hard copy textbooks Calculate the operating incomes for the Soft Copy textbooks Division and the Hard Copy textbooks division and company as a whole with transfer pricing at 120% of full cost d) From a financial standpoint, transfer pricing does not affect the organization's operating income. Please explain why an organization would choose to implement a transfer pricing policy

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