Transfer Pricing – How to know if its Marginal or Absorption in Income statement

Hi sir John,

Would like to ask you how to know if it’s Marginal or Absorption costing to construct the Net Income for each division? Im talking about the treatment of the 2 fixed costs below: “Annual divisional fixed production overheads” and “Annual divisional fixed administrative overheads”.
The transfer price is set at Wolverhampton’s full cost plus a 25% profit mark up.
The answer provided to me is for Birmingham Division, gross profit minus (875k+375k) so I assume they are using Marginal costing but I used Absorption costing instead.

Appreciate your kind assistance and I thank you in advance!

Wolverhampton Division Birmingham Division
External Selling Price per unit £25 £32
Direct material cost per unit £8 £3
Direct labour cost per unit £5 £3
Annual divisional fixed production
overheads £2,500,000 £875,000
Annual divisional fixed
administrative overheads £1,000,000 £375,000
Variable selling overheads per unit £1.75 £1.75
Annual production capacity 1,250,000 units 700,000 units
Sales to outside customers 900,000 units 350,000 units
Internal sales 350,000 units