Question: Question 5 (10 marks) Bedtime Bedding Ltd. manufactures pillows. The Cover Division makes covers, and the Assembly Division makes the finished products. The covers can

Question 5 (10 marks) Bedtime Bedding Ltd. manufactures pillows. The Cover

Question 5 (10 marks) Bedtime Bedding Ltd. manufactures pillows. The Cover Division makes covers, and the Assembly Division makes the finished products. The covers can be sold separately for $5.00. The pillows sell for $6.00. The information related to manufacturing for the most recent year is as follows: Cover Division manufacturing costs $6,000,000 External sales of covers by Cover Division $4,000,000 Market value of covers transferred to Assembly $6,000,000 Sales of pillows by Assembly Division $7,200,000 Additional manufacturing of Assembly Division $1,500,000 Required: Compute the operating income for each division and the company as a whole. Use market value as the transfer price. Are all managers happy with this concept? Explain. D Focus AB

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