Part A TAA, a multidiyisional telecommunications corporation, has two completcly independent profit centers c jnsidering a transfer. TAA subsidiaries operates within a decentralized exivironment. TAA will not dictate transfers or impose a transfer pricing policy on the divisions. They must be free to decide whether they should transfer, and if s9, they must negotiate a transfer price. Further, the TAA reward system must be based on the total divisional profits reported by the profit centers. One of IAA's divisions; Southwestern Ringer, produces telephone sets that it sells for $30 each. The standard absorptive manufacturing cost is $24, which includes $6 per unit in fixed overhead. The fixed overhead is allocated over its annual sales forecast of 50,000 telephone sets its maximum production capacity is 75,000 , sets anuually. Another division, Northeasterm Tell, can use the telephone sets in an answering machinetelephone-radio product it markets As an alternative to buying telephone sets from Southwestern, Northeastern can enter into a contract for the 20,000 sets needed from a Mexican company, OLA, Inc. OLA has quoted a price of $25 per set for the same quality telephone. Required: a. Determine whether a transfer should take place between Southwestern Ringer and Northeastern Tell. b. Should a transfer occur if Southwestern can increase sales and production yolumes to 75,000 sets annually by dropping the sales price to $27.50 ? Refer to Parz A. Northeastern. Tell wants its name impuinted on the telephode set. Tos Mexican supplier bas quoted a price of $31.00 pe: set. Soutiwestem Ringer will have to buy a stamping machine at a tuet cost of $20,000. Soizthwestern no longer cac produce at full capacity by dropping its sales price to $27.50; so the manager bas abandoned that idea. Required: Determine whetaer there shoudd now be a transfer. What transfer price wil. result in the managers benefiting equally from the transfer