Question 1: Transfer Pricing [20 marks] Table Tennis Ltd has two departments Ping and Pong. The Ping department is responsible for producing bats for young children. The Pong department uses the bats from the Ping department to package the bats into packaging made from recycled materials. Pong then sells their completed bats product to various wholesalers at a price of $5.50. Ping currently is operating at full capacity. The following table provides you with the manufacturing costs per unit of each department: Details Ping department (per bat) Raw materials $0.75 Direct labour cost (manufacturing) $0.35 Allocated fixed costs $0.10 Advertising and marketing costs Total Costs $1.20 The Pong department currently has the following costs, the cost of the bats from Ping as well as other material and labour costs of $2.10 per kilo, fixed costs of $0.80 per kilo and advertising and marketing costs of $0.75 per kilo. Greenbay who are a new competitor in the bats market have been in contact with Ping and have offered to buy their bats for $2.20 per kilo and are willing to purchase 1,500 bats. The manager of the Ping department is seriously considering this offer as it may bring in additional profits to their department and might lead to a big bonus for them at the end of the year. 1. What would be the transfer price that Ping would need to charge for the bats to the Pong department based on the above? Please provide adequate calculations, formulas, and reason for the price you have chosen. [5 marks] 2. Would this transfer price you have calculated above be appropriate for the Pong department to pay? Are there any implications to them accepting this price? Support your answer by providing calculations and a relevant discussion of any implications. ted States) Accessibility: Investigate [8 marks] Focus