Sales function The following sales forecasts are available for the 1st quarter N: January: 2,200 units; February: 3,500 units; March: 2,500 units. Average selling price: 15. Average payment delay granted to customers: 2 months. The sales function is carried out by a single person, remunerated by a fixed monthly fee of 1,500 gross salary and a gross commission of 4% of turnover. This sales person has the possibility to change the sales price by more or less 10% depending on the customer. However, the manager of the company is the only one to decide on the payment delay and any exceptions in this regard. Depreciation and amortization of the sales function represent 600 per month. The monthly amount of other expenses for the sales function is 100 + 0.50 per unit sold.

Production function The production department manages a production workshop and the supply of raw materials. It employs 2 people: the production manager and a worker. The total gross monthly salaries of these 2 people represent 3,800. In addition to his responsibility for the workshop, the production manager is in charge of supplying the workshop with raw materials. The finished goods inventory as of January 1 comprises 1,100 units of product. For the first quarter N, the production manager wishes to have at his disposal at the end of each month an inventory of finished products equal to half of the sales forecast for the following month. Sales for April are expected to be 3,000 units. The finished product stock is valued on the basis of a standard production cost of 10. The manufacture of a unit of product requires an average of 4 minutes of human work, knowing that the team can in total provide up to 190 hours of immediately productive work per month. When this production capacity is insufficient, the company uses a subcontractor for a unit cost of 13. Depreciation of the workshop currently represents 1,200 per month. Other workshop expenses represent 1 per unit manufactured in-house. In-house manufacturing of one product unit consumes 2 kg of raw materials at 2.50 per kg. The raw material supplier is paid at 30 days. The raw material stock includes 300 kg of raw material as of January1st .The production manager wants to reach a safety stock of 400 kg by the end of January. The raw material stock is valued at a standard purchase cost of 2.70 per kg.

Administrative function The gross monthly administrative salaries (the manager and a financial manager) represent a total of 6,500. Current depreciation charges for the administrative function amount to 500 per month. In February, construction work is scheduled to be carried out on the reorganization of the administrative premises. Their cost is estimated at 24,000. It would be depreciated on a straight-line basis over 5 years starting in March. The company will pay the supplier a deposit of 25% in January when the work is ordered, 25% at the beginning of March when the work is completed and the balance in April N. Other operating expenses for the administrative function are considered fixed and are estimated at 1,300 per month. The loan recorded in the opening balance sheet generates monthly installments of 400 with interest of 21 in January, 20 in February and 19 in March. The company plans to take out a new loan of 15,000 in February. This loan will generate monthly installments of 300 starting in March; the March installment for this new loan will include 30 in interest.

Taking into account the sale's department is a profit center , do you think it would be interesting to introduce a transfer price? If so, from which department to which department and for what reason?