Looking for help calculating transfer pricing under the full cost and variable cost method.

I am confused if I need to include the opportunity cost lost (as if Sakatchewan transfer to Alberta it loses sales to public customers as it is operating at capacity).

Information provided:

BIM's production in Saskatchewan and Alberta

BIM Saskatchewan has three plants, and the combined corporate tax rate is 22%.*

BIM Alberta has one central plant, and its combined corporate tax rate is 10%.*

*Tax rates are provided for calculation purposes only and can be assumed to be correct. Ignore the tax rules around transfer pricing for the purpose of this case.

Saskatchewan makes the wafer chips needed in many of Alberta's products. The corporate policy of BIM's previous executive team was for Saskatchewan to sell the wafer chips to Alberta at $10 per chip (Saskatchewan's average production cost). The external market price for this type of wafer chip averaged $20 per chip in 20X6. Saskatchewan is currently manufacturing wafer chips at capacity and, if it did not have to supply Alberta's operations, it could have sold the 330,000 chips delivered to Alberta to external companies in 20X6.

Appendix II

BIM Saskatchewan's 20X6 performance

BIM Saskatchewan has three manufacturing facilities located in Saskatchewan. The following is a summary of the performance in 20X6 (reported in $ thousands, unless otherwise noted):

Financial information 20X6 actual

Sales of mobile PC products $355,200

Total production costs $116,100

Net operating profit after tax $130,400

Capital employed (at year end) $1,094,000

Finished goods, raw materials, and WIP inventories (average) $30,400

Other information 20X6 actual

Sales (thousands of units) 649

Average sales price per portable PC unit $547/unit

BIM Alberta's 20X6 performance

sale of mobile PC products $188,000

Total production costs $59,300

Net operating profit after tax $74,300

Capital employed (at year end) $423,500

Finished goods, raw materials, and WIP inventories (average) $10,020

Other information 20X6 actual

Sales (thousands of units) 367

Average sales price per portable PC unit $512/unit

Thanks