Below is the solution for b) plz show me how to get numbers in the red box

3. Keepcool PLC, a divisionalised company makes refrigerators. There is trading between divisions. The "Motors" division has recently developed and patented a radical new energy efficient motor the M62. It forms the basis of keepcool's new product, the EcoFridge to be constructed and marketed by Products" division who will buy the M62 motors from Motors" division. The launch year will be 1.7.2015 to 30.6.2016 (2016). Production difficulties mean that only 5,000 can be made in that year. The company's other products will continue but the Eco Fridge will command a high price due to its radical nature. The following Tables show: Table 1 The expected performance for the year ended 30.6.2015 (2015) Table 2 The budgeted Income Statement for year ended 30.6.2016 (2016) for existing products but excluding forecast activity for M62 Motors and EcoFridges. Table 3 Separate details of the specific forecast costs for M62 Motors and EcoFridges and the forecast sales of 5,000 EcoFridges for year ended 20.6 2016 (2016): Table 1 Expected Income Statement - 2015 Sales revenue materials Labour Packaging and delivery Fixed overheads including depreciation Total costs Net Income Motors division Products division 000 000 *6.020 27,500 2,500 *15,800 1,800 6,000 0 260 1,470 4,800 5,770 26,860 250 640 Table 2 - Budgeted Income Statement - existing products 2016 Motors division Products division 000 000 Sales revenue *7.870 27,300 materials 2,820 *15,750 Labour 2,790 6,050 Packaging and delivery 0 305 Fixed overheads including depreciation 1,600 4,550 Total costs 7,210 26,655 Net Income 660 645 *Includes transfers between divisions Table 3 - Budgeted Revenues and Expenses - M62's and EcoFridges - 2016 Motors division Products division Details Per unit Total Details Per unit Total 000 000 Sales revenue ? 5,000 x 800 4,000 materials 5,000 x 24 120 5,000 x 130 650 Labour 5,000 x 80 400 5,000 x 100 500 Packaging and delivery 0 100 Fixed overhead 0 260 Nenreciation Ann 24n Motors" division sells motors to outside companies and other divisions but has agreed to only supply M62 in house, in line with the company's strategy for EcoFridges. Motors" division's usual method of calculating transfer price is prime costs plus 40%. However for EcoFridges, since "Motors" division has developed the new motor, the Motors" division manager considers it would be fairest to have a transfer price which shares the net income with Products" division on a basis which recognises the Motors division's effort. For 2015 the performance of the two divisions includes: Motors division 000 Assets at book value 3910 Annual depreciation (included in Fixed overheads) 800 Products division 000 5240 1,000 The fixed overhead includes the following: Research and development costs for the M62 motor Initial marketing costs relating to the launch of the new product 600 100 At the beginning of 2016 new assets will be bought as follows: Machinery to make M62s and EcoFridges 2,000 (assets have 5 year lives and no residual value) 1,200 The company uses Economic Value Added (EVA) with a capital charge of 12% to appraise divisions and makes the following adjustments to net income: Research and development is capitalised and written off over 3 years including the year of spending Launch marketing is regarded as a prepayment and charged in the year of launch. Required: (b) Calculate the transfer price to be paid for each M62 using "Motor" division's usual method. Using that transfer price calculate the total budgeted net income and EVA for 2016 for both divisions amalgamating the budgets for existing products, M62s and EcoFridges. (10 marks) b. Transfer price for M62 motors (24 + 80) x 1.4 = 145.60 x 5,000 = 728,000 Net Income and EVA for both divisions for 2016 Motors Div 000 Other Ecofridge Total 7,870 728 8,598 2,820 120 2,940 Sales Material Motors transferred 520 x 1.4 Products Div 000 Other Ecofridge Total 27,300 4,000 31,300 15,750 650 16,400 0 728 728 6,050 500 6,550 305 100 405 4,550 500 5,050 100 100 26,655 2,578 29,233 2,790 400 3,190 Labour Packaging and delivery Fixed overhead R & D/Marketing Total costs 1,600 400 2,000 200 200 1,120 8,330 7,210 645 1,422 2,067 660 (392) 268 Net Income Less capital charge 12% x 5,160* (4,910) EVA 509 624 115 1,307 373 287 216 589 (608) (321) 136 1443 Products Motors *30.6.2016 Investment calculation Previous assets 2015 book value Additions during 2016 5,240 1,200 6,440 1,240 5,200 Less depreciation 3,910 2,000 5,910 1,200 4,710 200 4910 R&D