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Automotive Bearing Systems Inc. (ABS), with headquarters in Aurora, ON, manufactures bearing systems that are sold to various car assembler plants. ABS has three divisions: a. A Division-has the foundry and produces the different parts. b. B Division-assembles the bearings. using the parts produced in the A Division. c. C Division-packages and distributes on a just in time schedule to all car assemblers plants of Honda and Ford. Each division is run as a profit centre. The costs for the work done in each division for each box of bearings are as follows: A Division: Variable Costs $50 and Fixed costs $90 B Division: Variable Costs $54 and Fixed costs $90 C Division: Variable Costs $25 and Fixed costs $50 Each box of bearings is sold to car assemblers by C Division for $700. Both the A and B Divisions sell part of their production under a private label. The A Division sells the bearing parts to a bearing manufacturer for $200. The B Division sells the finished bearings to a car assembler for $350. Required: 1. Calculate the prices at which each unit is transferred between divisions under each of the following transfer pricing methods: (a) market price and (b) 150 of full costs. (8 marks). 2. Calculate the operating income per unit earned by each division and by the company under each of the following transfer pricing methods: (a) market price and (b) 150% of full costs. (8 marks). 3. Discuss the benefits and drawbacks of using market price or full cost as a basis for establishing the transfer price between divisions. (4 marks)