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Tops Corporation is organized into two divisions, Manufacturing and Marketing. Both divisions are considered to be profit centers and the two division managers are evaluated in large part on divisional income. The company makes a single product. It is fabricated in Manufacturing and then packaged and sold in Marketing. There is no intermediate market for the product. The monthly income statements, in thousands of dollars, for the two divisions follow. Production and sales amounted to 10,000 units. Revenues Variable costs Contribution margin Fixed costs Divisional profit Manufacturing $3,000 2,400 600 500 $ 100 Marketing $5,000 3,700 $1,300 800 $ 500 Assume there is no special order pending. Required: a. What transfer price would you recommend for Tops Corporation? b. Using your recommended transfer price, what will be the income of the two divisions, assuming monthly production and sales of 10,000 units? C. The manager of the Manufacturing Division complains about the transfer price, saying that division profits are unfairly low. The two division managers meet and negotiate a transfer price of $295. What will be the income of the two divisions assuming monthly production and sales of 10,000 units. Complete this question by entering your answers in the tabs below. Required A Required B Required Using your recommended transfer price, what will be the income of the two divisions, assuming monthly production and sales of 10,000 units? (Enter your answers in whole dollars not in thousands of dollars.) Manufacturing Marketing Revenue $ 2,684 $ 7,000 Variable costs 2,684 3,684 Contribution margin $ 0 $ 3,316 Fixed costs 460 800 Divisional profit $ (460) $ 2,516

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