Use the Information Below to Answer the Following Question(s)

Multiple Choice

Use the information below to answer the following question(s) .Soft Cushion Company is highly decentralized.Each division is empowered to make its own sales decisions.The Assembly Division can purchase cushion stuffing from the Production Division or from external suppliers.The Production Division has been the major supplier of stuffing in recent years.The Assembly Division has announced that two external suppliers will be used to purchase the stuffing at $20 per kilogram for the next year.The Production Division recently increased its unit price to $40.The manager of the Production Division presented the following information; variable cost $32, fixed cost $8, to top management in order to attempt to force the Assembly Division to purchase the stuffing internally.The Assembly Division purchases 20,000 kg per month.
-The Transportation Division of Petrolia Paint Company can purchase paint from an independent producer at $12.60 per litre.The company has three divisions: Production, Transportation, and Paint.The company's Transportation Division is currently buying paint from the Paint Division for $24 per litre.Transfer prices are based on 125 percent of full cost.Which of the following would occur if the company uses dual pricing to record the Transportation Division purchases of paint from the Paint Division?

A) debit the Paint Division for $24.00
B) credit the corporate cost account for $11.40
C) debit the Transportation Division for $12.60
D) credit the Paint Division for $12.60
E) credit the Paint Division for $32.40