Problem 8: (Transfer Pricing) Norte Division of Zamboanga Corporation produces a product that is being sold in the outside market for P20. The following are the cost being incurred by North Division at a normal capacity of 100,000 units: Direct Materials P 5.00 Direct Labor 3.00 Variable Overhead 2.00 Fixed Overhead 4.00 Variable Selling 2.00 Fixed Selling and Administrative 2.00 South Division of Zamboanga Corporation is also in need of the same product that North Division produces; however, South is currently purchasing its requirements of 10,000 units to an outside supplier for P15. Zamboanga Corporation's central management would like to determine whether South Division should continue buying from the outside supplier or should start purchasing from North Division.Required: 1. What is the minimum and maximum selling price that both divisions will be willing to accept? 2. Supposing that the central management forced the manager of South Division to purchased from North Division, what is the ideal transfer price assuming that: a. North Division can only sell 80,000 units to the outside market b. North Division can sell all 100,000 units but will be able to save on variable selling expenses if it will be selling to South Division. C. North Division can only sell 95,000 units but will be able to save P1 on variable selling expenses if it will be selling to South Division. 3. Supposing that the central management forced the manager of South Division to purchased from North Division at a transfer price of P16. What will be the effect of the transaction to the company as a whole if: a. North Division can only sell 90,000 units to the outside market b. North Division can sell all 100,000 units to the outside market but will be able to save on variable selling expenses if it will be selling to South Division C. North Division can only sell 95,000 units to the outside market but will be able to save P1 on variable selling expenses if it will be selling to South Division