Question 6 Mount Vernon Corporation's Gauge Division manufactures and sells product no. 24, which is used in refrigeration systems. Per-unit variable manufacturing and selling costs amount to $23 and $7, respectively. The Division can sell this item to external domestic customers for $40 or, alternatively, transfer the product to the company's Refrigeration Division. Refrigeration is currently purchasing a similar unit from Taiwan for $36. Assume use of the general transfer- pricing rule. Required: (a) Determine the maximum price that the Refrigeration Division would be willing to pay to Gauge Division for one unit. (3 marks) (b) If Gauge had excess capacity, determine the transfer price that the Division's management should set. (4 marks) (c) If Gauge had no excess capacity, determine the transfer price that the Division's management should set. (4 marks) (d) Repeat part "C," assuming that Gauge was able to reduce the variable cost of internal transfers by $5 per unit. (4 marks) (e) Evaluate any TWO (2) advantages and TWO (2) disadvantages for each of the following: transfer pricing methods: market-based and cost-based (10 marks) (Total: 25 marks)