Transfer Pricing Exoplex Industries Inc. is a diversified aerospace company, including two operating divisions, Semiconductors and Navigational Systems. Condensed divisional income statements, which involve no intracompany transfers and include a breakdown of expenses into variable and fixed components, are as follows: Exoplex Industries Inc. Divisional Income Statements For the Year Ended December 31, 2018 Semiconductors Division Navigational Systems Division Total Sales: 2,240 units x $396 per unit $887,040 $887,040 3,675 units x $590 per unit $2,168,250 2,168,250 Total sales $887,040 $2,168,250 $3,055,290 Expenses: Variable: 2,240 units x $232 per unit 3,675 units x $472* per unit Fixed Total expenses Income from operations $519,680 $519,680 $1,734,600 1,734,600 220,000 325,000 545,000 $739,680 $2,059,600 $2,799,280 $147,360 $108,650 $256,010 $432 of the $472 per unit represents materials costs, and the remaining $40 per unit represents other variable conversion expenses incurred within the Navigational Systems Division.