5. Calculate a transfer price for the following case (20p). Show your calculations and give arguments for your answers. Corporation Division A Division B Transfer price = ? External market A strategy of this corporation is to design and produce high quality products to fashion-oriented customers. Division A has a textile mill where they manufacture fabrics. Division B is a Design unit in which they design and manufacture fashion clothes by using the fabrics that were produced in Division A. One meter of fabric is needed to produce one dress. Variable manufacturing costs in Division A are 18 per meter. If Division A sells the fabric to the external markets, the market price is 30 per meter. Alternatively, Division A can sell the fabric to Design unit B with a transfer price. Variable manufacturing costs in Division B are 25 per dress and the final selling price is 50 per a dress. a. Would it be worthwhile for Division A to sell the fabric to Design Unit B if there is demand from external market? (6p) b. If it is possible to produce 1000 meters of fabric in Division A, but there is an external buyer for only 600 meters, at what transfer price can the remaining 400 meters be sold to Design Unit B? (p) C. Consider the situation from the perspectives of division management and strategic decision- making. (6p)