ZP Plc operates two subsidiaries, X and Y. X is a component manufacturing subsidiary and Y is an assembly and final product subsidiary. Both subsidiaries produce one type of output only. Subsidiary Y needs one component from Subsidiary X for every unit of Product W produced. Subsidiary X transfers to Subsidiary Y all of the components needed to produce Product W. Subsidiary X also sells components on the external market. The following budgeted information is available for each subsidiary: 

The production cost per component is 60% variable. The fixed production costs are absorbed based on budgeted output. X sets a transfer price at marginal cost plus 70%. 

Required 

Calculate the post-tax profit generated by each subsidiary.

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XY Market price per component Market price per unit of W Production costs per component Assembly costs per unit of W Non-production fixed costs External demand $800 $1 200 $600 $400 $1.5m $1.3m 10 000 units 12 000 units Capacity 22 000 units Taxation rates 25% 30%