Division A of book retailer DYMOCK LTD has operting data as follow

Capacity 20,000 units

Selling price $ 80 per unit

Variable costs $45 per unit

Fixed costs $20 per unit

Division B wants to purchase units from division A. if division A agrees to sell units to division B, A's variable costs will be $5 less per units

Required:

1.If Division A has capacity available to meet B's requirements, what is the minimum price it should charge? Please show your workings. [4 marks]

2.Which transfer pricing system/approach potentially takes the most time to establish, and why? [3.5 marks]