Division South Does Not Have Excess Capacity to Produce Product

Multiple Choice

Division South does not have excess capacity to produce Product Y.The division can sell Product Y for $10 per unit outside the company.Variable costs are $6 per unit.Division North wants to purchase Product Y from Division South to use in Product ZZ.The selling price of Product ZZ is $25 per unit and variable costs to finish the product after the transfer are $12 per unit.An outside supplier will sell Product Y for $12 per unit.What is the maximum price Division North will pay for Product Y?

A) $12 per unit
B) $13 per unit
C) $25 per unit
D) none of the above