Question (12 marks) sembly and Mechanical. The Assembly Division components to the Mechanical Division at a Assembly Division's standard variable production on could sell all its components to outside buyers at Limited has two divisions: Assembly and as partially completed components to termined transfer price. The Assembly Divis er unit is $950. This division could sell all it 140 per unit in a perfectly competitive market. Ocean Limited transfers partia predetermined to cost per unit is The Mechanical Division has a special offer of $10 Division incurs variable costs of $200 in addition to th Division's components. Both divisions currently have spare ecial offer of $1,495 for its product. The Mechanical ts of $200 in addition to the transfer price for the Assembly ts Both divisions currently have spare production capacity. Required: a) Determine a transfer price using the general transfer pricing rule. (2 marks) b) What transfer price would you recommend if there was no outside market for the transferred component, and the Assembly Division has spare capacity? (2 marks) c) Assume that the transfer price has been set at $1,133, is the Mechanical Division manager likely to want to accept or reject the special offer? Why? (3 marks) d) is the decision in the best interests of Ocean Limited as a whole? Explain. (3 marks) e) When is it more appropriate to use market-based transfer price rather than cost- based transfer price? (2 marks)