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Question 5 The Kensington Fair City (KFC) division of Great Plains Corporation, operating at capacity, has asked by Eastem Redcliffe Plains (ERP) division to supply it with electrical fitting no. 1726. K sells this part to its regular customers for $7.50 each. ERP, which is operating at 50 percent capacity, is willing to pay SS Ach for the fitting. It will put the fitting into a brake unit that it is manufacturing on a cost-plus basis for a commercial airplane manufacturer. FC KFC has a $4.25 variable cost of producing fitting no. 1726. The cost of the brake unit as built by ERP follows: Purchased parts-outside vendors KFC fitting no. 1726 Other variable costs Fixed overhead and administration Total $22.50 5,00 14.00 8.00 $49.50 ERP believes that the price concession is necessary to get the job. The company uses ROl and dollar profits to measure divisional and division manager performance REQUIRED: If you were KFC's division controller would you recommend that it supplies fitting no. 1726 to ERP? Why or why not? (Ignore any income tax issues.) A. (4 marks) Is it to the short-run economic advantage of Great Plains Corporation for KFC to supply ERP with fitting no. 1726 at $5 each? Explain your answer. (Ignore any income tax issues.) B. (6 marks) Discuss the organizational and managerial behaviour difficulties, if any, inherent in this situation. As Great Plains Corporation's controller, what would you advise the corporation's president to do in this situation? (10 marks) (Total: 20 marks)