Assume that Foleo Skills can outsource their promotion campaign to an external provider for $4,500.

(a) Is it likely that the internal trade will take place? Why? (Hint: calculate the internal transfer price)

(b) Would Marketing Department prefer to sell internally or externally? Support your answer by comparing the contribution margin earned by Marketing Department from each option. (Hint: the external selling price would be the same as the internal transfer price)

(c) Is the situation in part (a) in the best interests of the organisation as a whole? Explain.