Question 2 Pintas Java Ehd is a corporation that manufactures hea'lqi,r industrial equipment. The ccmpang,r is organized along decentralized product lines, with each manufacturing division operating as a separate prot center. Each division manager has been delegated full authority on all decisions involving the sale of that division's output both to outsiders and to other divisions of Pintas Japa. The East Division has in the past always purchased its requirement of component 'Zeta' from the North Division. However, when informed that North Division is increasing its selling price to RM135, East Division's manager decides to purchase the Zeta component from external suppliers. East Division can purchase the component for RM115 per unit in the open market. North Division insists that, because of the recent installation of some highlj,r specialized equipment and the resulting high depreciation charges, it will not be able to earn an adequate retum on its investment unless it raises its price. North Division's manager appeals to top management of Pintas Jays for support in the dispute with East Division and supplies the following operating data: East Division's annual purchases of the Zeta component 1,9 units North Division's variable cost per unit of the Zeta component RM lS North Division's fixed cost per unit of the Zeta component RM 25 Required: a- Assume that there are no altemative uses for internal facilities of North Division. Determine whether the company.' as a whole will benet if East Division purchases the component from external suppliers for RM] 15 per unit. What should the transfer price for the component he set at so that division managers acting in their own divisions' best interests take actions that are also in the best interest of the companf,r as a whole? {3 marks} b- Assume that internal facilities of North Division would not otherwise be idle. Ev not producing the 1,9l} units for East Division, North Division's equipment and other facilities would he used for other production operations that would result in annual cash-operating savings of Rlvlll. Should East Division purchase from external suppliers? Show your computations. {4 marks} c. Assume that there are no alternative uses for North Division's internal facilities and that the price from outsiders drops RM 15. Should East Division purchase from external suppliers? What should the transfer price for the component he set at so that division