Chemical Company has two divisions, the Mixing Division and Bottling Division. The

Bottling Division would like to buy from the Mixing Division. Standard costs for the Mixing Division are as

follows:

Direct materials

$3.00 per gallon

Direct labor

$2.40 per gallon

Variable overhead

$3.60 per gallon

Variable M&A

$0.50 per gallon

Fixed M&A

$ 5.000

Fixed OH

$20.000

The Mixing Division has production capacity of 20,000 gallons. The Bottling Division would like to buy

2,000 gallons from the Mixing Division. If the Mixing Division sells to the Bottling Division, it can avoid

variable marketing and administrative expenses. The Mixing Division currently sells its product at $15 per gallon.

If the Mixing Division has excess capacity to fill the Bottling Division's order, what is the minimum fransfer

price it would be willing to accept?

O $ 9.00

O $14.00

O $ 8.00

O $15.00

O $14.50