Mercury Ltd. is organised in two divisions i.e. Manufacturing division & internal Trading Division, both are profit centres. Mfg. Div. Selles its output to external traders as well as to Internal Trading Division (ITD), which ITD repack the same in a pack of 10 kg each & sale it to end users.P.T.O.[6025]-40011One of the product produced by manufacturing Div is 'Panovama'. Which is a mineral. Total production capacity is 2000 tones, per month. At present monthly sales are limited to 1000 tones to External Traders & 600 tones to ITD. The transfere price agreed to ITD was Rs. 2000 per tone in line with price charged to External Traders, but now company reduced transfer price to Rs. 1800 per tone to External Traders due to competition. The manger of ITD is saying price charged to them should be lesser than External Traders, but mfg, Department refused to do 50.Existing price charged to end users by ITD is Rs. 40 per pack of 10 kg each. ITD argures that with reduced transter price it could reduce its selling price to end users to Rs. 32 per pack of 10kg with additional sale. Of 40000 packs with a condition to reduce transfer price to Rs. 1700 per tone. Relavent cost data of 'Panaroma' is are follows.ParticularsVariable cost per toneFixed costRequired.As a consaltant of company will you accept the proposal of ITD to reduce transfer price with additional sale. Justify with calculation.