Division E of Harveq Company Has the Capacity for Making

Multiple Choice

Division E of Harveq Company has the capacity for making 6,000 motors per month and regularly sells 5,400 motors each month to outside customers at a contribution margin of $54 per motor. The variable cost per motor is $41. Division F of Harveq Company would like to obtain 900 motors each month from Division E. What should be the lowest acceptable transfer price from the perspective of Division E?

A) $59.00 per unit
B) $54.00 per unit
C) $41.00 per unit
D) $18.00 per unit