Disregard the current method of calculating the transfer price and instead assume that the transfer price will be determined by negotiation between the Marketing Department Manager and Elise Burton (the Foleo Skills Business Unit Manager). Also assume that Elise Burton can still outsource the campaign for the price of $4,500.

(a) Calculate the range of transfer prices (i.e. the minimum and maximum) that would be acceptable to both the Marketing Department and Foleo Skills.(Hint: Use the General Transfer Pricing Rule for minimum price in your calculations and show all workings.)

(b)Will the internal trade take place based on the new transfer price calculated in part (a)? Explain.

(Hint: Consider both Marketing and Foleo Skills in your response.)

(c) Is the situation resulting from part (b) in the best interests of the organisation as a whole? Explain.

(Hint:Identify any costs or savings that will support your answer.)