1. Mt. Castle Corp operates a Manufacturing Division and a Marketing Division. Both divisions are profit centers. Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in addition to Marketing.

	Manufacturing	Marketing
Capacity (units)	1,060,000	506,000
Sale price-to 3rd Parties	$1,700	$4,850
Variable costs	$620	$1,800
Fixed costs	$10,600,000	$7,260,000

(For Marketing, the variable cost does not include the transfer price paid to Manufacturing)

1. If current production levels in Manufacturing are 606,000 units and Marketing requests and additional 106,000 units to produce a special order, What should be the appropriate transfer price?

2. Suppose Manufacturing is operating at full capacity. What would be the most appropriate transfer price?