Markey Corporation consists of two divisions, North and South. The North makes Glop, a product that can be used in the production of the product that the South division makes and sells. Both divisions are considered profit centers. The following data are available concerning Glop and the two divisions:

	North	South
Average units produced	150,000
Average units sold		150,000
Variable manufacturing cost per unit	$2
Variable finishing cost per unit		$5
Fixed divisional costs	$75,000	$125,000

The North Division can sell all of its output outside the company for $4 per unit. The South Division can buy the Glop from other firms for $4. The South Division sells its product for $12.What is the optimal transfer price in this case?

Select one:

a. $9 per unit

b. $4 per unit

c. $7 per unit

d. $2 per unit