The Component Division of TransCanada Industries provides components to the Elite Division in the production of grombets. It costs the Component Division a total of \($5.50\) per unit to manufacture the components, which they then sell to the Elite Division for \($8\) per unit, allowing for a profit. The Elite Division can purchase the component on the open market at \($7.50.\) What transfer price should be charged between divisions and why?

a. \($8;\) it allows for profit for the Component Division

b. \($7.50;\) it encourages competitive behaviour and cost control in the Component Division and will help to ensure that the Elite Division purchases internally

c. \($5.50;\) it is better to charge only the cost to manufacture, to ensure that the Elite Division is motivated to purchase internally

d. None of the above