Harrison Inc. owns fast food restaurants and snack food and beverage manufacturers in Canada. One oftherestaurants,PizzaPlace,servesavariety ofbeveragesalongwithpizzas. Oneofthebeveragesis ginger beer, which is served on tap. Harrison has just purchased a new division, Cumberland Beverages, that produces ginger beer. The managing director of Cumberland Beverages has approachedthemanagingdirector ofPizzaPlace aboutpurchasingCumberlandBeveragesgingerbeer for sale at Pizza Place restaurants rather than its usual brand of ginger beer. Managers at Pizza Place agree that the quality of Cumberland Beverages ginger beer is comparable to the quality of their regular brand. It is just a question of price. The basic facts follow:

CumberlandBeverages:

Ginger beer production capacity per month 10,000kegs

Variable cost per keg of ginger beer$8 per keg

Fixedcostspermonth $70,000

Selling priceofCumberlandBeveragesgingerbeer on theoutside market$20perkeg

Pizza Place:

Purchase price of regular brand of ginger beer $18perkeg

Monthly consumption of ginger beer2,000 kegs

Solve for the following:

1. Sellingdivision transfer pricerangewithsomeidle capacity
2. Sellingdivision'slowestacceptabletransfer price
3. Thepurchasingdivision'shighestacceptabletransfer price