Division A of XYZ Company produces a part that it sells to other companies. Sales and cost data for the part follow:

Capacity in units	60,000	units
Selling price per unit	$ 40	per unit
Variable costs per unit	$ 28	per unit
Fixed costs per unit at capacity	$ 9	per unit

Division B, another division of XYZ Company, would like to buy this part from Division A. Division B is presently purchasing the part from an outside source at $38 per unit.

If Division A sells to Division B, $1 in variable selling costs can be avoided.

Assume that Division A is presently operating at full capacity.

What is the lowest acceptable transfer price by the selling division?

$36 per unit

$37 per unit

$38 per unit

$39 per unit