Assume that Division A has a product that can be sold either to Division B of the same company or to outside customers. The managers of both divisions are evaluated based on their own division's return on investment $($ROI$).$ The managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated.

Division A:

Capacity in units $=300,000$

Number of units now being sold to outside customers $=300,000$

Selling price per unit on the outside market $=$$$41$

Variable costs per unit $=$$$19$

Fixed costs per unit $($based on capacity$)=12$

Division B:

Number of units needed annually $=100,000$

Purchase price now being paid to an outside supplier $=$$$38$

Assume that Division A can avoid $$6$ per unit in variable costs on any sales to Division B$.$ Which one of the following statements is most correct regarding the division managers' response to the opportunity for the internal transfer?

the managers will not agree to a transfer

the managers will agree to a transfer at a price between $$38$ and $$410$

the managers will agree to a transfer at a price between $$19$ and $$38$

the managers will agree to a transfer at a price between $$35$ and $$38$

the managers will agree to a transfer at a price between $$36$ and $$39$