An Appropriate Transfer Price Between Two Divisions of the Stark

An appropriate transfer price between two divisions of The Stark Company can be determined from the following data: What is the natural bargaining range for the two divisions?

A) Between $20 and $50.
B) Between $50 and $70.
C) Any amount less than $50.
D) $50 is the only acceptable price.
E) $20 is the only acceptable pricE.The minimum transfer price acceptable to the Fabricating Division = out-of-pocket cost + opportunity cost, in this case $20 . The maximum price the Assembly Division would be willing to pay would be the external market price, $50. Thus, the transfer price range would be between $20/unit and $50/unit.