Moraine Products, Inc., has Division A that manufactures and sells a number of products, including a pump that could be used by another division in the company, Division B, in one of its products. Data concerning that pump appear below:

Capacity in units		64,500
Selling price to outside customers	$	120
Variable cost per unit	$	72
Fixed cost per unit (based on capacity)	$	30

The Division B is currently purchasing 5,900 of these pumps per year from an overseas supplier at a cost of $93 per pump.

Assume that the Division A is selling all of the pumps it can produce to outside customers. What should be the minimum acceptable transfer price for the pumps from the standpoint of the Division A?

Multiple Choice

• $72 per unit

• $120 per unit

• $102 per unit

• $93 per unit