Brighto Ltd has two divisions. The Oakland Division transfers partially completed components to the Westlake Division at a predetermined transfer price. The Oakland Division's production costs per unit include $400 of variable production costs and $70 of applied fixed overhead costs. The Oakland Division has no spare capacity, and it could sell all of its components to outside buyers at $580 per unit in a perfectly competitive market. The Westlake Division incurs variable costs of $200 in addition to the transfer price for the Oakland Division's components and sells its finish products at $750 per unit. Required: 1. Determine a transfer price using the general rule. (1 mark) 2. How would the transfer price change if the Oakland Division has spare capacity? (1 mark) 3. Assume that a transfer price has been set as the Oakland Division's absorption cost plus a 10% markup and both divisions have spare capacity. The Westlake Division has a special offer of $680 per unit for its product. a. Calculate the transfer price. (1 mark) b. Is this special offer in the best interests of Brighto Ltd as a whole? Why? (2 mark) c. Would an autonomous Westlake Division's manager accept or reject the special offer? Is this decision in the best interests of Brighto Ltd as a whole? Explain. (2 marks) d. How could the situation be remedied using the transfer price? (2 marks)