The San Ramona Corporation makes water pumps. The Engine Division produces engine that is used by Assembly Division. The following are the cost components of the engine based on 20,000 units production of engines: $10 Direct materials Direct labor Variable overhead Fixed overhead Cost per unit 3 $20 Fixed selling and administrative : $500,000 Variable selling per unit $1 The spare part is usually sold to external market with the price between $28 and $29. This division can produce 200,000 units per year, but because of the bad economic condition, only 150,000 units predicted to be sold next year. The variable selling cost is avoidable if the sales conducted internally. Assembly Division had been buying from external supplier at the cost of $28. This division predicts to use 50,000 units of spare parts next year. The manager of Assembly proposes the purchase order of 50,000 spare parts each from Engine Division Required: a. What is the minimum acceptable transfer price for Engine division? Support with calculation. b. Decide the minimum payable transfer price from Assembly Division C. Should the internal transfer be performed? Explain the reason