An appropriate transfer price between two divisions of The Stark Company can be determined from the following data:

Fabricating Division:
Market price of the subassembly	$	50
Variable cost of the subassembly	$	20
Excess capacity (in units)		1,000
Assembly Division:
Number of units needed		900

What is the natural bargaining range for the two divisions?

Multiple Choice

• $20 is the only acceptable price.

• Between $50 and $70.

• Between $20 and $50.

• $50 is the only acceptable price.

• Any amount less than $50.