Exercise 15-27 Transfer Pricing Policies: Ethical Issues (LO 15-4) Best Practices, Inc., is a management Consulting firm. Its Corporate Division advises private firms on the adoption and use of cost management systems, Government Division consults with state and local goverments. Goverment Division has a client that is interested in implementing an activity-based costing system in its public works department. The division's head approached the head of Corporate Division about using one of its associates Corporate Division charges clients $675 per hour for associate services, the same rate other consulting companies charge. The Government Division head complained that could hire its own associate at an estimated variable cost of $275 per hour, which is what Corporate pays its associates Suppose that Government Division will charge the client interested in implementing an activity-based costing system by the hour based on cont plus a fixed fee, where the cost is primarily the consultant's hourly pay: Assume also that Government Division cannot hire additional consultants. That is, if it is to do this job, it will need to use a consultant from Corporate Division Required: 1. What is the minimum transfer prices Corporate Division should obtain for its services, assuming that it is operating at capacity per hour a-2. Would this be an ethical price to charge the Government client? Yes O No b-1. What is the transfer price you would recommend it Corporate Division was not operating at capacity? Transfer price for Corporate Division per hour - b-2. Would this be an ethical price to charge the Government client? Yes No