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Washburn Associates has two divisions. Western Division, which has an investment base of $50,000,000,$ produces and sells $1,440,000$ units of a product at a market price of $$68$ per unit. Its variable costs total $$33$ per unit. The division also charges each unit $$20$ of fixed costs based on a capacity of $1,540,000$ units.

Eastern Division wants to purchase $220,000$ units from Western. However, it is willing to pay only $$48$ per unit because it has an opportunity to accept a special order at a reduced price. The order is economically justifiable only if Eastern can acquire Western$$s output at a reduced price.

Division managers are evaluated using residual income using a $9$ percent cost of capital.

Required:

What is the residual income for Western without the transfer to Eastern?

What is Western$$s residual income if it transfers $220,000$ units to Eastern at $$40$ each?

What is the minimum transfer price for the $220,000-$unit order that Western would accept if it were willing to maintain the same residual income with the transfer as it would earn by only selling its $1,440,000$ units to the outside market?

Note: Round your final answer to $2$ decimal places.

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