Edit: Use the following to and questions 6-7

The Lao Shu Division of Fir Products,Inc. manufactures rubber moldings and sells them externally (SP) for $165. Its variable cost (V/C) is $75 per unit, and its fixed cost (F/C) per unit is $21. Fir's president wants Lao Shu Division to transfer 5,000 units to another company division at an offer price of $96.

6. Assuming the Lao Shu Division has available capacity (excess capacity or it is at <100%) of 5,000 units, the minimum transfer price (MTP) it should accept is:

A) $21. B) $75 C) $96. D) $165

7. Assuming the Lao Shu Division does not have any available capacity (no excess capacity or it is = 100%), the minimum transfer price (MTP) it should accept is:

A) $2. B) $75 C) $96 D) $165