Question: Question 2 - Week 8 (7 marks) Perfumes Lid has two divisions: the Perfume Division and the Bottle Division. decentralised and each division is evaluated

 Question 2 - Week 8 (7 marks) Perfumes Lid has two

Question 2 - Week 8 (7 marks) Perfumes Lid has two divisions: the Perfume Division and the Bottle Division. decentralised and each division is evaluated as a profit centre. The Bottle D bottles that can be used by the Perfume Division. The Bottle Division's variable cost per unit is $3.00 and shipping costs are $0.20 per unit. The Bottle Division price is $4.00 per unit. No shipping costs are incurred on sales to the Perfur Perfume Division can purchase similar bottles in the external market for $3.5 The Bottle Division has sufficient capacity to meet all external market deman meeting the demands of the Perfume Division. Required: a) Using the general rule, determine the minimum transfer price. (2 marks) b) Assume the Bottle Division has no excess capacity and can sell every externally. Would the transfer price change? (2 marks) c) Assume the Bottle Division has no excess capacity and can sell every externally. What is the maximum amount Perfume Division would be willin bottles? (2 marks] d) When is it more appropriate to use market-based transfer price rather transfer price? (1 mark) SHOW YOUR WORKING

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