GENERAL TRANSFER PRICING RULE: MANUFACTURER

Electro Ltd has 2 divisions:Assembly and Electrical.

The Assembly Division transfers partially completed components to the Electrical Division at a predetermined transfer price.The assembly Division's standard variable production cost per unit is $450. This division has spare capacity, and it could sell all its components to outside buyer at $570 per unit in a perfectly

question:

1.Determine a transfer price using the general rule.

2.how would the transfer price change if the Assembly Division had no spare capacity?

3.What transfer price would you recommend if there wasno outside market for the transferred component,and the Assembly division had spare capacity?