Division S sold a part to both Division P and outside customers last year. The revenues from these sales were $30 000 (1000 units) and $35 000 (1000 units), respectively. Next year, S plans to increase the unit sales price to $42 and wants a proportionate increase in the sales price to Division P. The unit costs are $9 variable and $15 fixed. If Division P does not agree to the price increase, 50% of Division Ss fixed costs will be eliminated.

What is the highest price Division P would be willing to pay for external purchases?

*a. $36.00

b. $16.50

c. $30.00

d. $28.50