Clearview Window Company manufactures windows for the home-building industry. The window frames are produced in the Frame Division. The frames are then transferred to the Glass Division, where the glass and hardware are installed. The companys best-selling product is a three-by-four-foot, doublepaned operable window. The Frame Division also can sell frames directly to custom home builders, who install the glass and hardware. The sales price for a frame is $190. The Glass Division sells its finished windows for $430. The markets for both frames and finished windows exhibit perfect competition. The standard variable cost of the window is detailed as follows:

	Frame Division					Glass Division
Direct material		$	35				$	85	*
Direct labor			50					35
Variable overhead			85					70
Total		$	170				$	190

*Not including the transfer price for the frame.

Assume that there is no excess capacity in the Frame Division.

Required:

1-a. Use the general rule to compute the transfer price for window frames.

1-b. Calculate the transfer price if it is based on standard variable cost with a 10 percent markup.