Mubins has two divisions, Distribution and Production. The company's primary product is soil. Each division's costs are provided below:

Production:	Variable costs per kilogram	$0.05
	Fixed costs per kilogram	$0.25
Distribution:	Variable costs per kilogram	$0.03
	Fixed costs kilogram	$0.02

The Distribution Division has been operating at a capacity of 4,000,000 kilograms a week and usually purchases 2,000,000 kilograms from the Production Division and 2,000,000 kilograms from other suppliers at $0.45 per kilogram. What is the transfer price per kilogram from the Production Division to the Distribution Division, assuming the method used to place a value on each kilogram of soil is 160% of variable costs?

A)

$0.08

B)

$0.48

C)

$0.40

D)

$0.05

E)

$0.11