Your company produces cookies in a two-step process. The Mixing Division prepares the cookie dough and transfers it to the Baking Division, which bakes the cookies and packs all finished cookies for shipment. At a recent meeting of your companys board of directors, the manager of the Baking Division made this statement: That Mixing Division is robbing us blind! Because of the boards concern about this statement, the company controller gathered the following data for the past year: During the year, the two divisions completed and transferred or shipped 200,000 regular cookie boxes and 150,000 deluxe cookie boxes. Transfer prices used by the Mixing Division follow. The regular box wholesales for $8.60 and the deluxe box for $22.00. The company uses a predetermined formula to allocate administrative costs to the divisions. Management has indicated that the transfer price should include a 20 percent profit factor on total division costs. 1. Prepare a performance report on the Mixing Division. 2. Prepare a performance report on the Baking Division. 3. Compute each divisions rate of return on controllable cost (cost of goods sold) and on total division costs. (Round percentages to two decimal places.) 4. Do you agree with the statement made by the manager of the Baking Division? Explain your response. 5. What procedures would you recommend to the board of directors?

Only need #4 and #5 answered please