Question 3 (6 points) The Post Division makes posts that can be sold to the Lamp Division of the same company or to outside customers. Each year the Lamp Division buys 20,000 posts from the Post Division. Activity of the Post Division last year is as follows: Capacity in units Selling price to outside customers Variable costs Fixed costs, total 250,000 posts $2.00/post $1.10/post $125,000 The total fixed costs would be the same for all the alternatives below. Required: 1. Calculate the lowest transfer price that would not reduce the profit of the Post Division given the following two independent scenarios: a. Assume there is enough capacity to supply the Lamp Division without affecting outside sales. (1 mark) b. Assume the internal transfer will reduce sales to outside customers by 10,000 units. (2.5 marks) 2. Assume the internal transfer will reduce sales to outside customers by 10,000 units as calculated in Part 1.b. above. If the Lamp Division buys the posts from an outside supplier at $1.40 each instead of from the Post Division, will operating income for the company as a whole increase or decrease, and by how much? (2.5 marks)