Answer the Following Question(s)using the Information Below

question 18

Multiple Choice

Answer the following question(s) using the information below.Easy Fit Ltd.manufactures heating, ventilation, and air conditioning (HVAC) equipment.The Manufacturing Division creates parts; and, the Assembly Division builds and sells the equipment.The Manufacturing Division "sells" furnace parts packages to the Assembly Division.The market price for the Assembly Division to purchase a mini furnace is $3,500.The fixed costs for the Manufacturing Division are assumed to be the same over the range of 2,000-5,000 units.The fixed costs for the Assembly Division are assumed to be $40.00 per unit at 5,000 units.Manufacturing costs per furnace are:
Assembly's costs per completed furnace are:

-Assume the transfer price for a furnace is 130% of total costs of the Manufacturing Division and 5,000 of the furnaces are produced and transferred to the Assembly Division.The Manufacturing Division's operating income is

• A)$3,250,000.
• B)$1,175,000.
• C)$2,500,000.
• D)$2,625,000.
• E)$2,760,000.

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