Specific fixed costs

From my understanding we do not include any fixed cost as part of contribution calculation although that specific fixed cost is subject to incremental elements

In this case, i have another concerned, while we calculate transfer pricing, when deriving relevant cost - 1) variable cost 2) specific fixed cost 3) opportunity cost
why the second on 2) specific fixed cost is in? Is this because it is not period cost/sunk cost?

Its tricky, I really struggle with this thing

Specific fixed costs are costs that relate to the specific project/division. So.....if the project/division is stopped, you lose the contribution but you also save the specific fixed costs.
You do not deduct them when calculating contribution.
Yes - if they are specific they can be avoided by stopping the project/division.

ncl 123: what you are after in transfer pricing is the extra cost to the supplying division of making the product. Usually it is just the marginal (variable) cost, because we assume that the total fixed costs of the division will not change.
However, if there are specific fixed costs that will only occur if the product is produced for the other division then they should be included.