MTG Group Ltd is involved in fish processing and supply in various countries. Currently, the group have subsidiaries in Madagascar, Mauritius and Reunion Islands. The fish are cached in the Indian Ocean, that is mainly in these three countries territory and accordance with the mutual agreement between these countries company can process the fish in any of these countries but will have to supply at least 50% of the processed fish to these three Island for their consumption. The company is expected to produce 1,200,000 process fish can per year. Production and exportation cost will be as listed below: Madagascar Fishing cost USD 5 per unit produce Labour cost USD 7 per unit produce Exportation cost USD 25,000 per 1,000 unit Local authority cost USD 5,000 per year Management fee service fees USD 50,000 per year Royalties payable to MTG is 2% of revenue Mauritius Fishing cost USD 5 per unit produce Labour cost USD 10 per unit produce Exportation cost USD 20,000 per 1,000 unit Local authority cost USD 7,000 per year Management fee service fees USD 50,000 per year Royalties payable to MTG is 2% of revenue Reunion Fishing cost USD 5 per unit produce Labour cost USD 15 per unit produce Exportation cost USD 10,000 per 1,000 unit Local authority cost USD 15,000 per year Management fee service fees USD 50,000 per year Royalties payable to MTG is 2% of revenue The tax law in these countries are as follows: Madagascar tax law: Corporate tax is 30% Withholding tax dividend is 15% The capital gain tax is 15% Royalties withholding tax 20% Management service tax 5% Mauritius tax law: Corporate tax is 15% Withholding tax is 10% The capital gain tax is 5% Royalties withholding tax 5% Management service tax 0% French tax law: Corporate tax is 40% Withholding tax is 10% The capital gain tax is 5% Royalties withholding tax 7% Management service tax 5% The selling price of the processed fish is USD 50 in each of the three-country. However, the price is higher for those sold outside these three islands. REQUIRED (a) Base on the information provided above, you have to recommend whether the company should set up only one processing unit or one unit in each country. (30 Marks) (b) Explain the circumstances when the company could have charge different prices to each of the three countries.