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A Lot of Power Ltd owns seven power stations which are powered by water, wind, and geothermal energy. Each power station is operated as an

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A Lot of Power Ltd owns seven power stations which are powered by water, wind, and geothermal energy. Each power station is operated as an independent division. The divisions are supported by a number of support departments such as research and development, human resources and environmental management. The environmental management department consists of 25 environmental engineers. These engineers must seek out business from the divisions - that is, the projects they work on must be mutually agreed to and paid for by one of the divisions. Under A Lot of Power Ltd's current transfer pricing system, the environmental management department is required to charge the divisions for environmental services at cost (approximately $120 per hour). This is considerably cheaper than external contractors who charge approximately $200 per hour for environment services. Required: You can type your answers straight into the box below, or . you can type your answers into a document, and cut and paste into the box below. (a) Is the environmental management department sentralised or stesentralised? Explain your answer.. (You must type your answer - do not handwrite) (3 marks) (b) What type of responsibility sentce is the environmental management department? Explain your answer.. (You must type your answer - do not handwrite) (2 marks) (c) Should A Lot of Power Ltd retain its current transfer pricing system, or change it to market-based pricing? Explain your answer.. (You must type your answer - do not handwrite)

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