Question 2 Fire Ltd produces garden furniture in its two divisions A and B Division A produces the garden chairs and then transfers them to Division B, who varnish them and sell them to national garden centres for 50 per chair. The budgeted data for the month is Division A Division B Units transferred/sold Annual fixed costs Material costs per unit Labour costs per unit Other variable costs per unit 20,000 75,000 8 5 2 20,000 40,000 2 3 2 Required: a. Calculate the profits for each of the divisions and also for the company as a whole, if the transfer price from Division A to B is: (i) 25 per unit (ii) 30 per unit (30 marks) b. Comment upon the results with the 2 different transfer prices and on the motivational impact on the two divisional managers (15 marks)