Division a of Harkin Company Has the Capacity for Making

Multiple Choice

Division A of Harkin Company has the capacity for making 3,000 motors per month and regularly sells 1,950 motors each month to outside customers at a contribution margin of $62 per motor. The variable cost per motor is $35.70. Division B of Harkin Company would like to obtain 1,400 motors each month from Division A. What should be the lowest acceptable transfer price from the perspective of Division A?

A) $26.57
B) $51.20
C) $35.70
D) $62.00