=+7. Helman pIe is a diversified company having, among others, major interests in the mechanical, civil and structural engineering industries and in motor pump manufacturing.

The motor pump division is a separate profit centre, aIthough a significant proportion, sometimes as much as 60%, of its output is sold to other divisions. Up until now the inter-divisional trans actions have not attracted top management's attention. However, a situation has arisen where the engineering division has appealed to top management to intervene.

The motor pump division has quoted aprice of EI 80 per batch of 100 pumps. The engineering division has obtained quotations from external suppliers of as low as f135, although EI 60 per batch of 100 pumps seems to be the norm. Neither division is willing to negotiate further, and top management has requested and obtained the following data from the respective divisions:

Motor Pump Division Average cost of manufacture of one batch of 100 pumps Engineering Division Average Distribution cost of one batch of 100 pumps Average Revenue of one batch of 100 pumps 10 + 1.5Q 25 + 8.8Q 305 - 0.6Q Q is the quantity of pumps in batches of 100 which can be transferred.

Required: