Algodones Inc. has a number of divisions, including a Mattress Division and a Furniture Division. The Furniture Division owns and operates a chain of furniture stores in the Midwest. Each year, the Furniture Division purchases mattresses for its bedroom suites. Currently, it purchases a basic mattress from an outside supplier for $230. The manager of the Mattress Division has approached the manager of the Furniture Division about selling mattresses to the Furniture Division. The full product cost of a mattress is $160. The Mattress Division can sell all of the mattresses it makes to outside companies for $230. The Furniture Division needs 10,000 mattresses per year; the Mattress Division can make up to 50,000 mattresses per year.

Although the Mattress Division has been operating at capacity (50,000 mattresses per year), it expects to produce and sell only 40,000 mattresses for $230 each next year. The Mattress Division incurs variable costs of $90 per mattress. The company policy is that all transfer prices are negotiated by the divisions involved.

Required:
1. What is the maximum transfer price? Which division sets it?
2. What is the minimum transfer price? Which division sets it?
3. Suppose that the two divisions agree on a transfer price of $175. What is the benefit for the Mattress Division? For the Furniture Division? For Algodones Inc. as a whole?