Question 1 a) Why is goal congruence important to an organisation's success? How can a responsibility accounting system foster goal congruence? b) Discuss the benefits and costs of decentralisation. c) Why do decentralised businesses use transfer prices? d) When is it more appropriate to use market-based transfer prices rather than cost-based transfer prices? e) Explain the meaning of shared services and team based structures? f) How might real time reporting contribute towards competitive advantage of an organisation?Question 2 Part A Climate Assist Ltd has two divisions: Assembly and Electrical. The Assembly Division transfers partially completed components to the Electrical Division at a predetermined transfer price. The Assembly Division's standard variable production cost per unit is $300. This division has spare capacity, and it could sell all its components to outside buyers at $380 per unit in a perfectly competitive market. Required: a) Determine a transfer price using the general rule. b) How would your answer change if the Assembly division had no spare capacity? c) What transfer price would you recommend if there was no outside market for the transferred component, and the Assembly Division has spare capacity? Part B Refer to the information from Question 1 (above). The Assembly Division's absorption cost of a component is $340, which includes standard variable production cost per unit of $300 and $40 of applied fixed overhead costs. The transfer price has been set at $374, which is the Assembly Division's absorption cost plus a ten per cent mark up. The electrical Division has a special offer of $465 for its product. The Electrical Division incurs variable costs of $100 in addition to the transfer price for the Assembly Division's components. Both divisions currently have spare production capacity.Required: a) Is the Electrical Division manager likely to want to accept or reject the special order? Why? b) Is this decision in the best interest of Climate Assist Ltd as whole? Explain c) How could the situation be remedied using the transfer price? (Adapted from Langfield-Smith et al., McGraw-Hill)