Division G Makes a Part That It Sells to Customers

Multiple Choice

Division G makes a part that it sells to customers outside of the company.Data concerning this part appear below:
Division H of the same company would like to use the part manufactured by Division G in one of its products.Division H currently purchases a similar part made by an outside company for $83 per unit and would substitute the part made by Division G.Division H requires 500 units of the part each period.Division G has ample capacity to produce the units for Division H without any increase in fixed costs and without cutting into sales to outside customers.If Division G sells to Division H rather than to outside customers,the variable cost be unit would be $2 lower.What should be the lowest acceptable transfer price from the perspective of Division G?

A) $47
B) $87
C) $83
D) $57