Allentown Division of Sparks Inc The Allentown Division Is Operating at 60 Percent of Its

Allentown Division of Sparks Inc.transfers its product to the Youngstown Division.The Youngstown Division can either buy the item internally or externally (cost = $73 each).The Allentown Division has just completed its annual cost update as follows: $$\begin{array} { | l | r | } \hline \text { Direct material } & \$ 25.00 \\\hline \text { Direct labor } & 18.00 \\\hline \text { Variable manufacturing } & 6.00 \\\text { overhead } &\\\hline \begin{array} { l } \text { Fixed manufacturing } \\\text { overhead }\end{array} &3.50 \\\hline \text { Variable selling expenses } &4.00\\\hline \text { Fixed selling and } &\underline { 8.50} \\ \text { administrative expenses } & \\\hline \text { Total costs } & \$ 65.00\\\hline \text { Desired retum } & 14.00 \\\hline \text { Sales price } & \$ 79.00 \\\hline\end{array}$$
The Allentown Division is operating at 60 percent of its 400,000 unit capacity.Required:
1)What is the minimum transfer price the Allentown Division should charge for internal transfers?
2)What is the maximum price the Youngstown Division would be willing to pay?
3)Why should the Allentown Division reduce its price to the Youngstown Division?