The Following Segment Reporting Statement Includes Salamander Company's Expected Results

Essay

The following segment reporting statement includes Salamander Company's expected results for the coming period:
$\begin{array}{c}\text{Salamander Company}\\\text{ Segment Reporting Statement}\\\begin{array}{lcc}&\text{Division A }&\text{Division B}\\\text { Sales A: }(10,000 \times \$ 160)&\$1,600000\\ B: (25,000 \times \$ 72) & &\$ 1,800,00 \\\text{Variable costs} &\underline{1,360,000}&\underline{900,000} \\\text{ Contribution margin} &\$240,000 &\$900,000 \\\text{Fixed costs}&\underline{160,000}&\underline{ 360,000} \\\text{Profit}&\underline{ \$80,000}&\underline{ \$540,000 }\\\end{array}\end{array}$

Included in Division A's costs are 10,000 units of a subcomponent purchased from an outside supplier for $45. The managers have recently initiated negotiations for Division B to supply the components to Division A. Division B has a total capacity of 40,000 units.
Required:
(a) Prepare a new segment reporting statement for the Salamander Company, assuming an internal transfer at the maximum transfer price.
(b) Prepare a new segment reporting statement for the Salamander Company, assuming an internal transfer at the minimum transfer price.