Transfert pricing

Hi Tutor,
Please I need some claification on the below vocabulary in relation to the tansfert pricing.

– Division A is working in full capacity

– Division A not working in full capacity

and please link each of them to the below :

– Division A has spare capacity

– Division A has no spare capacity.

My understanding is that, when division A has spare capacity, this mean the minimum transfert price is equal to the marginal cost.

And when there is no spare capacity, the minimum transfert price is equal to the marginal cost + the lost of contribution.

My issue is to link the above 2 to the concept of working in full capacity or not.

Please assist.

Thanks.
Daniel.