Holiday Corp

Multiple Choice

Holiday Corp.has two divisions,Quail and Marlin.Quail produces a widget that Marlin could use in its production.Quail's variable costs are $4 per widget while the full cost is $7.Widgets sell on the open market for $12 each.If Quail is operating at capacity,what would be the minimum transfer price if Marlin currently is purchasing 100,000 units on the open market?

A) $4.00
B) $5.00
C) $7.00
D) $12.00