Franklin Manufacturing Company has two divisions, X and Y. Division X prepares the steel for processing. Division Y processes the steel into the final product. No inventories exist in either division at the beginning or end of the year. During the year, Division X prepared 80,000 pounds of steel at a cost of $800,000. All the steel was transferred to Division Y where additional operating costs of $5 per pound were incurred. The transfer price for the steel has been $8 per pound for the past five years. The final product was sold for $3,000,000. Currently, Division X sales are entirely to Division Y. However, the manager of Division X has been exploring sales to outside organizations as a means to boost the divisions operating income. Based on negotiations so far, the manager believes contracts for 100,000 pounds of steel could be secured, for the next fiscal year, at a selling price of $21 per pound.

Required: As the manager of Division Y, what transfer price would you advocate for steel produced by Division X for the next fiscal year? Provide the analysis/argument for the transfer price recommended.