Hu Corporation Has Two Operating Divisions, a AndB A)$115
B)$195
C)$125
D)$200

Multiple Choice

Hu Corporation has two operating divisions, A andB. The following information is provided for Division A: Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $180 to purchase the product from an outside source. If Division A sells internally it can save $5 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made?
$$\begin{array} { | l | l r | } \hline \text { Unit selling price } & \$ & 200 \\\hline \text { Unit variable costs } & \$ & 120 \\\hline \text { Unit fixed costs } & \$ & 40 \\\hline\end{array}$$

A) $115
B) $195
C) $125
D) $200