**Answer:**

The correct answer for option (a) is **$2.6** and for option (b) is **$7.19.**

**Explanation:**

According to the scenario, the given data are as follows:

**(a).** If fastener division is not operating at full capacity,

then, opportunity cost = $0

Here, variable cost = $3.01

Fastener could avoid $0.41.

Then Variable cost = $3.01 - $0.41 = $2.6

So, we can calculate the minimum transfer price by using following formula:

**Minimum transfer price = Variable cost + Opportunity cost**

= $2.6 + $0

**= $2.6**

**(b).** If fastener division is operating at full capacity,

then, opportunity cost = $7.60 - $3.01 = $4.59

Here, variable cost = $3.01

Fastener could avoid $0.41.

Then Variable cost = $3.01 - $0.41 = $2.6

So, we can calculate the minimum transfer price by using following formula:

**Minimum transfer price = Variable cost + Opportunity cost**

= $2.6 + $4.59

**= $7.19**