Randolph Company Has Two Divisions Organized as Profit Centers: Redmon

Randolph Company has two divisions organized as profit centers: Redmon and Tomlin.Randolph expects the following results: $$\begin{array} { | l | r | r | } \hline & \text { Reckon } & \text { Tomlin } \\\hline \text { Sales } & & \\\hline \text { Redmon: } ( 10,000 \times \$ 16 ) & \$ 1,600,000 & \\\hline \text { Tomlin: } ( 250,000 \times \$ 7.20 ) & & \$ 1,800,000 \\\hline \text { Variable costs } & 1,360,000 & 1,000,000 \\\hline \text { Contribution margin } & \$ 240,000 & \$ 800,000 \\\hline \text { Fixed costs } & 160,000 & 460,000 \\\hline \text { Profit } & \$ 80,000 & \$ 340,000 \\\hline\end{array}$$
Included in Redmon's costs are 100,000 units of a subcomponent purchased from an outside supplier for $4.50.The managers have recently initiated negotiations for Tomlin to supply the components to Redmon.Tomlin has a total capacity of 400,000 units.Required:
a.Prepare a new segment reporting statement for Randolph,assuming an internal transfer at the maximum transfer price.b.Prepare a new segment reporting statement for Randolph,assuming an internal transfer at the minimum transfer price.