In order to vertically integrate, an organization has acquired Cabin Art Company (CAC) a former supplier who specializes in creating unique cruise-cabin artwork for each cruise-cabin.In prior years, CAC had been selling artwork online for $60 per item to its customers, including this organization. Other CAC financial information is as follows:

• Variable cost per unit: $30
• Fixed cost per unit $20: (based on total fixed costs of $200,000 and production of 10,000 units)
• Capacity 10,200 units
• Sales: 10,000 units (500 to CCC, and 9,500 to other customers)
• Tax rate for CAC = 10%, tax rate for CCC = 30% Assume that the applicable tax authorities will accept a range of transfer prices between full-cost to market-price.

Assume that CAC and the organization are both profit centres. What is the range of transfer prices if the organization would like to purchase an additional 500 units.

What transfer price is in the best interest for the company as a whole.

Should CAC continue to be a profit centre?