Boat Hull Manufacturing produces boat parts at the manufacturing facility in Virginia. The managerial accountant reported that Boat Hull Manufacturing manufactures parts to repair the container ships that import products from China. The main part that Boat Hull Manufacturing produces is the T24 part. The Port Department produces the T24 part at the Boat Hull Manufacturing facility in Virginia. There is excess capacity at the facility. The managerial accountant reported the current market price of the T24 part is $1600 and reported the following manufacturing cost and expenses data:

Boat Hull Manufacturing Costs and Variable Expense ReportT24 Part

Direct materials	$905
Direct labor	$182
Variable manufacturing overhead	$110
Fixed manufacturing overhead (current production level)	$140
Variable selling expenses (only incurred on sales to outsideconsumers)	$80

What is the highest transfer price the selling division wouldreceive, and the buying division would pay, for the T24 part?

A.$1277

B.$905

C.$1197

D.$1600