A desk calendar’s variable cost is $5 and its market value is $6.25 at a transfer point from the Printing division to the Binding division. The Binding division’s variable cost of adding a simulated leather cover is $2.80, and the selling price of the final calendar is $8.50. 

1. Prepare a tabulation of the contribution margin per unit for the Binding division’s performance and overall company performance under the two alternatives of (a) selling to outsiders at the transfer point and (b) adding the cover and then selling to outsiders. 

2. As Binding division manager, which alternative would you choose? Explain.