Determining Market-Based and Negotiated Transfer PricesCarreker, Inc., has a number of divisions, including the Alamosa Division, producer of surgical blades, and the Tavaris Division, a manufacturer of medical instruments.

Alamosa Division produces a 2.5 cm steel blade that can be used by Tavaris Division in the production of scalpels. The market price of the blade is $21. Cost information for the blade is:

Variable product cost$ 9.30 Fixed cost5.00Total product cost$14.30Tavaris needs 16,000 units of the 2.5 cm blade per year. Alamosa Division is at full capacity (82,000 units of the blade).