Subject: Analysis and Recommendations for Camden Limited's Manufacturing Divisions Dear Board Members, I have conducted a thorough analysis of the situation involving Arnos Division (A) and Barnet Division (B) at Camden Limited. The key concerns revolve around the transfer price of product X, the low rate of return in Division B, and the proposed opening of a branch office for product Z. Current Situation: Division A charges Division B 30 per unit for product X, which is the outside supply price. Division B is experiencing a rate of return below the target set by Head Office. Division B's manager advocates for a lower intra-group transfer price based on production costs plus a reasonable mark-up. The proposed branch office for Division B could potentially increase the market for product Z by 5,000 units per year, incurring additional costs of 50,000 per annum. Rate of Return Calculation: Division A: Capital Employed = 6,625,000 Rate of Return = (Profit / Capital Employed) * 100 Division B: Capital