2. (25 points). Specialized manufactures bikes using two divisions: The Framing Division and the Assembly Division. The Framing Division manufactures the bike frame using high grade carbon and the assembly division order the bike components such as the wheels, the brakes and the drivetrain, and assembles the bikes. Both divisions operate as investments centers, and top divisional managers negotiate the transfer price for any transactions between the two divisions. The Framing Division has a production capacity of 200,000 bike frames and the following production cost per bike frame. Framing Division - Production Costs Per unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling & administration $480 75 90 180 120 Note: for bike frames transferred internally, the variable selling & administration is only $45 per unit