The Watkins Company isdecentralized, and divisions are considered investment centers. Watkins specializes in sportsequipment, and one division manufactures netting that is used for basketballhoops, soccergoals, and other sports equipment. The Netting Division reports the following information for aheavy-duty basketball hoopnet:

Netting Division Information

Sales Price per Unit 18

Variable Cost per Unit 6

Contribution Margin per Unit 12

The Basketball Equipment Division can purchase a similarheavy-duty net from an outside vendor for$15.

1. Determine the negotiable range for the transfer price.

2. What is the minimum transfer price the Netting Division should consider if operating atcapacity? Belowcapacity?

3. What is the maximum transfer price the Basketball Equipment Division shouldconsider?