1. Alex Ltd, has two divisions, a Parts Division and Marketing Division. Each division operates as a profit centre. The Parts Division manufactures keyboards and is free to sell its product internally and externally. The Parts Divisions annual capacity is 45,000 units and its fixed cost is $720,000. Currently, sexternal sales represent 70% of the Parts Divisions production capacity. The selling price for a keyboard is $60, and the variable manufacturing cost is 60% of the selling price. Commissions is $ 5 per unit.

The Marketing Division is requesting a new specialty Keyboard to be used with a new game. Mr. Roberts, the manager of the Marketing Division, has obtained a quote of $70 from external suppliers. He has asked the Parts Division to provide a quote for 9,000 units. To make the speciality order, the Parts Division needs to invest in a stamping machine, costing $36,000. In addition, the speciality keyboard will incur additional $15 of variable cost for new features; however, it will reduce the regular variable cost by $3 of commission cost due to internal transfer. It takes 2 regular keyboards to make 1 specialty keyboard. The new keyboard can be sold for $90.

Required:

1. Calculate the minimum transfer price for the speciality keyboard order.
2. Establish the range for the transfer price, if any, between the two divisions.
3. Should the Parts Division pursue this opportunity to sell the speciality keyboard internally?