E Inc., operates 2 divisions: 1) a management division that owns and manages bulk carriers on the Lakes and 2) a repair division that operates a dry dock in Key West. The repair division works on company ships, as well as other large hull ships. The repair division has an estmated variable cost of $37 per labor hour. The repair division has a backlog of work for outside ships. They charge $70 per hour for labor, which is standard for this type of work. The management division complained that it could hire its own repair workers for $45 per hour, including leasing an adequate work area. What is the minimum transfer price per hour that the repair division should obtain for its services, assuming its operating AT capacity.

1)$45

2)$37

3)$33

4)$70