Division M Makes a Part That It Sells to Customers

Multiple Choice

Division M makes a part that it sells to customers outside of the company.Data concerning this part appear below: Division O of the same company would like to use the part manufactured by Division M in one of its products.Division O currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division M.Division O requires 5,000 units of the part each period.Division M can sell every unit it produces on the outside market.What should be the lowest acceptable transfer price from the perspective of Division O?

A) $75
B) $66
C) $16
D) $50
E) $25