The Kelso Division Produces and Sells a Product to External

Multiple Choice

The Kelso Division produces and sells a product to external and internal customers. Per-unit information about its operations include: $\begin{array}{l}\begin{array}{lr}\text { Selling price per unit to external customers } & \$ 250 \\\text { Variable manufacturing costs per unit } & 115 \\\text { Fixed manufacturing overhead costs per unit } &70\end{array}\\\end{array}$
If Kelso has sufficient excess capacity to meet internal demand, what should be the transfer price for Kelso's product?

A) $245
B) $250
C) $115
D) $185