Stillwell Industrial Resources Company (SIRC) has several divisions. However, only two are involved in the internal transfer of products. The Mining Division refines a material called toldine, which is then transferred to the Metals Division. The toldine is processed into an alloy by the Metals Division, and the alloy is sold to customers at $150 per unit. The Mining Division is currently required by SIRC to transfer its total yearly output of 380,000 units of toldine to the Metals Division at total actual manufacturing cost plus 10 per cent. Unlimited quantities of toldine can be purchased and sold on the open market at $90 per unit. While the Mining Division could sell all of the toldine it produces at $90 per unit on the open market, it would incur a variable selling cost of $5 per unit.

The following table shows the detailed unit cost structure for both the Mining and Metals divisions during the most recent year:

	Mining Division	Metals Division
	$	$
Transfer price from Mining Division	-	66
Direct material	12	6
Direct labour	16	20
Manufacturing overhead	30*	25**
Total cost per unit	58 ===	117 ===

* Manufacturing overhead cost in the Mining Division is 30 per cent fixed and 70 per cent variable.

** Manufacturing overhead cost in the Metals Division is 60 per cent fixed and 40 per cent variable.

Required:

a. Using market price as the transfer price, determine the unit contribution margin and total contribution margin for both the Mining Division and the Metals Division. Show all calculations.

b. If SIRC were to introduce the use of negotiated transfer prices and allow divisions to buy and sell on the open market, determine the price range for toldine that would be acceptable to both the Mining Division and the Metals Division. Explain your answer.

c. Use the general transfer-pricing rule to calculate the lowest transfer price that would be acceptable to the Mining Division. Explain whether your answer is consistent with your conclusion in requirement b above?