Question 3: [5 marks] A bicycle manufacturing company has two departments: the seat department and assembling department. The Seat department can choose to sell seats to the assembling department or to external customers. Use the following information to answer questions to follow. Seat Department Production capacity 15000 seats Selling price to external customer $40 Variable costs per unit $22 Fixed costs $255,000 Assembling department $38 Purchase price from external supplier Number of bicycle seats needed Questions: 5000 seats 1. Assume the Seat Department can sell all 15,000 seats to customers outside the firm. There is a 5$ saving in variable cost per unit if transfers take place within the firm. What is the acceptable transfer prices, if any? Show calculations. [2 marks] 2. What other points need to be considered for fixing the transfer price if the two departments are located in different countries? Explain. [3 marks]