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Page 9 Drexwell Corporation has a Components Division that works for internal divisions in the Corporation as well as for external customers. The Entity's Tools Division has asked the Components Division to provide it with 2,400 pecial tos each year. The special tols would require $19.00 er unit in variable production costs. The Tools Division has a bid from an outside supplier for the special tools at unit. In order to have time and space to produce the special tool, the Component Division would have to cut back production of another job Qx-30 that it preseftly is producing. The QX-30 sells for shipping costs of the QX-30 are $6.00 per unit. Packaging and shipping costs for the new special full copac $38.00 per unit, and requires $24.00 per unit in variable production costs. Packaging and tool would be only $0.75 per unit. The Component Division is now producing and selling 12,000 units of the QX-30 each year. Production and sales of the QX-30 would drop by 10% if the new 1200 Lat n cm special tool is produced for the Tools Division. Cut down Required: 24 What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of 2,400 special tools per year from the Components Division to the Tools Division? (7 marks)

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