2/ The Paper Division of Tech Ed, Inc. produces photographic paper that can be sold externally or internally to Tech Ed's Photography School Division. Sales and cost data per package of paper are: Unit selling price Unit variable product cost Unit product fixed cost Practical capacity $3.95 2.25 1.20 (S600,000/500,000) 500,000 units During the coming year, the Paper Division expects to sell 350,000 packages of photographic paper. The Photography School Division currently plans to buy 150,000 packages of this paper on the outside market for $3.95 each. The manager of the Paper Division has approached Photography School Division manager and offered to sell the 150,000 packages of paper for $3.75 each based on saving certain selling costs. Required: 1. What is the minimum transfer price that the Paper Division would be willing to accept What is the maximum transfer price that the Photography School Division would be willing to pay? Should an internal transfer take place? What would be the benefit (or loss) to the firm as a whole if the internal transfer takes place? 2. Suppose the Photography School Division manager knows that the Paper Division has idle capacity. Do you think that he would agree to the transfer price of $3.75? Suppose he counters with an offer to pay $3.20. If you were the Paper Division manager, would you be interested in this price? 3. Suppose Tech Ed, Ine.'s policy is that all intermal transfers take place at full manufacturing cost. What would the transfer price be? Would the transfer take place