RJ, a television manufacturer, has 2 divisions in the same country:Electro and Assemble.They are evaluated asprofit centres and operate at below full capacity.The Electro division produces the electronic component of thetelevision.The Electro division can produce 26,000 units of electronic components.It is now producing 19,500 units.It sells12,000 units to Assemble for $250 per unit and 7,500 units to an external client at the market price of $265 each.Aconflict occurs when the manager of Assemble division realized that he was buying the electronic components atalmost the same price as an external client, even though Assemble is a division of RJ.The Electro division's manager is sympathetic to the situation.However, it would be difficult for him to reduce thetransfer price because the unit variable operating costs amount to $210.If the sales were interdivisional, 60% of theselling and administrative expenses could be saved.Selling and administrative expenses are currently 20% of thevariable operating costs.There are also fixed operating costs of $90 per unit.REQUIRED:a)Explain how transfer pricing can affect a firm's profits.b)Could the Electro division reduce its transfer price for the electronic component?If so, what should be theminimum transfer price accepted by the Assemble division?Show all your calculations.c)Suppose that the Assemble division needs an additional 12,000 electronic