The Consulting Division of IBM Corporation is often involved in assignments for which IBM computer equipment is sold as part of a systems installation. The Computer Equipment Division is frequently a vendor of the Consulting Division in cases for which the Consulting Division purchases the equipment from the Computer Equipment Division. The Consulting Division does not view itself as a sales arm of the Computer Equipment Division but as a strong competitor to the major consulting firms of information systems. The Consulting Divisions goal is to maximize its profit contribution to the company, not necessarily to see how much IBM equipment it can sell. If the Consulting Division is truly an autonomous investment center, it has the freedom to purchase equipment from competing vendors if the consultants believe that a competitors products serve the needs of a client better than the comparable IBM product in a particular situation. (This is the only information provided to answer this question)

Discuss the transfer-pricing issues that both the Computer Equipment Division manager and the Consulting Division manager should consider. If top management does not have a policy on pricing transfers between these two divisions, what alternative transfer prices should the division managers consider?