The Snappy Tool Co. has two divisions, Industrial and Oil and Gas. Industrial manufactures a high strength structural fastener, XYZ, which it sells to the Oil and Gas division for use with large and small diameter pipelines it constructs. Industrial also sells the same high strength industrial fasteners outside the company on the open market.

Relevant facts for the Industrial division are as follows:

Industrial is operating well below capacity.

Sale price of Fastener XYZ to the open market$ 32.50

Variable cost to produce Fastener XYZ... $ 17.50

Fixed costs$50,000

What is the minimum price Fastener XYZ should be transferred from the Industrial to the Oil and Gas Division?

If Snappy Tool Co. uses a negotiated transfer price what is the range for the appropriate transfer price for the transfer of Fastener XYZ from the Industrial Division to the Oil and Gas division?

What is the appropriate transfer price for the transfer of Fastener XYZ from the Industrial division to the Oil and Gas division if the Industrial Division was operating at full capacity?