Baganza Sdn. Bhd. (BSB) has a number of divisions which operate as a separate profit centre including Parts Division and Audio Division. The Audio Division produces a 3 line of MP3 players which require component AZ. Currently it purchases this component from an outside supplier for RM6.50 per component. The manager of the Parts Division has approached the manager of the Audio Division about selling component AZ to the Audio Division in the second half of year 2019. The full product cost of component AZ is as follows: (RM) Direct materials 1.00 Direct labour 0.50 Variable manufacturing overhead 1.00 Fixed manufacturing overhead 1.60 Total unit cost 4.10 The Audio Division needs 18,000 component AZ for the second half of year 2019. Although the Parts Division has been operating at capacity (60,000 components per year), it expects to produce and sell only 45,000 components for RM6.50 each for year 2019. The BSB policy is that all transfer prices are negotiated by the divisions involved. REQUIRED: (a) Determine the transfer price and the division which sets it for the following: (i) Minimum (floor) (2 Marks) (ii) Maximum (ceiling) (2 Marks) (b) Analyse the effect on operating income, if the negotiating divisions agree on a transfer price of RM5.75, for the following: (i) Parts Division (2 Marks) (ii) Audio Division (2 Marks) (iii) BSB as whole. (2 Marks)