he Industrial Machine Division has requested a specially designed subassembly from the Metal Fabricating Division. Because the assembly is specially designed, no outside market price can serve as a reference point for establishing an internal transfer price. The estimated cost of manufacturing the subassembly follows: Direct materials $100 Direct labor 25 Variable overhead 50 Fixed overhead* 30 Total unit cost $205 *Representing an allocation of existing fixed overhead. The total fixed overhead is the same, regardless of whether the Metal Fabricating Division produces the subassembly. The Industrial Machine Division will use 10,000 of the subassemblies per year. The manager of the Metal Fabricating Division has offered to supply the subassembly for full cost plus the division's average markup. Assuming that average markup is 35 percent, compute the offered transfer price. What do you think of the pricing scheme suggested by the manager of the selling division