Petula Corporations small motor division manufactures small electrical motors that are used in the manufacture of electric appliances. The Appliance division manufactures appliances and uses one small electrical motor in each appliance. These motors are currently purchased from another company at a cost of $28. The appliance division requires 15,000 motors annually. The small motor division sells its motors to the outside market at a price of $32 each. The cost to manufacture one motor is as follows:
			Variable cost per unit	$12
			Fixed cost per unit	8
	The small motor division has the capacity to produce 40,000 motors and is currently producing and selling 32,000 motors annually.
	1.	Calculate the minimum and maximum transfer price. Should a transfer between the two divisions take place? Explain. (4 marks)
	2.	Assume that the division managers agree on a transfer price of $25. Calculate the incremental benefit to each division of making a transfer. (3 marks)