Divisions M and T are two profit centers of a large, diversified and decentralized firm. Division M has a capacity to make 800,000 units of a product and is currently selling 600,000 units to outsiders. The selling price is $150, variable costs are $90, and fixed costs per unit are $40. Division T is purchasing 150,000 units of the same product made by M from an outside supplier for $144 per unit. If M supplies these products to T, then it can save variable costs of $15 per unit with the internal transfer.

The minimum transfer price from M to T (assuming M supplies these products to T), so that shareholder value is maximized, is:

• A. $150
• B. $144
• C. $90
• D. $135
• E. $75