The clock division of Control Central Corporation manufactures clocks and then sells them to customers for $10 per unit. Its variable cost is $4 per unit, and its fixed cost per unit is $2.50. management would like the clock division to transfer 8.000 of these clocks to another division within the company at a price of $5. The clock division could avoid $0.50 per clock variable packaging costs by selling internally.

Required: a. Determine the minimum transfer price, assuming the clock division is not operating at full capacity and what is your interpretation of these results? (5%) b. Determine the minimum transfer price, assuming the clock division is operating at full capacity and what is your interpretation of these results? (5%) c. Why transfer pricing policy can be interpreted negatively and positively? Give an explanation! (5%)