The Halifax division of Canadian Controls (CC) produces a digital thermometer. The thermometer can be sold on the open market for $75 each or it can be used by the Ottawa division in the production of a temperature control gauge. The Halifax division is currently operating at 70% of its capacity of 2,000 digital thermometers per month. Following are average costs per unit at this level of capacity:

	Average cost
Direct Materials	$20
Variable Supplies	$10
Fiexed Costs	$33
Total Average Cost per Thermometer	$63

Total average cost per thermometer $63 If a digital thermometer is sold on the open market, the shipping cost is $5, paid by Halifax Division. The cost of shipping a digital thermometer internally from Halifax to Ottawa Division is $1, also paid by the Halifax Division.

a.) What is the best transfer price or range of transfer prices - for Canadian Controls overall if a digital thermometer is transferred to Ottawa and the Halifax division is operating at 70% of capacity? Will transfers occur? What is the maximum number of units that could be transferred at this range of prices?

b.) What is the best transfer price - or range of transfer prices - for Canadian Controls overall if a digital thermometer is transferred to Ottawa, but the Halifax division is operating at full capacity and the digital thermometer could have been sold on the open market? Will transfers occur?

c.) Suppose the Ottawa division can purchase a substitute for the digital thermometer from an outside supplier for $70 (including shipping costs). What transfer price, if any, would motivate the managers to transfer internally i) per part a? ii) per part b? above.

Provide a detailed solution containing all supporting calculations.