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Parkside, Inc. has several divisions that operate as decentralized investment centers. Parksides Entertainment Division manufactures video arcade equipment using the products of two of Parksides other divisions.

In 2016, the Plastics Division manufactured two brands of plastic components: Totoong Plastik that is made exclusively for the Entertainment Division and Plastik Talaga brand that is sold to outside markets. With a normal production capacity of 100,000 units, 70% pertained to the Totoong Plastik while the remaining capacity are used to produce Plastik Talaga. Both components incur the same production costs. No variable marketing costs are incurred if products are sold internally. Entire capacity was sold in 2016 to respective parties based on above allocation.

The products of the Video Cards Division are sold in a competitive market; however, one video card model is also used by the Entertainment Division. 20% of the normal video card production capacity of 50,000 units are supplied to Entertainment Division; the remaining portion is sold to various customers that are not related parties to Parkside. No variable marketing costs are incurred if products are sold internally. Entire capacity was sold in 2016 to respective parties based on above allocation. The actual costs per unit of the components are presented below.

Plastic Components

Video Cards

Direct Material

1.25

2.40

Direct Labor

2.35

3.00

Variable Overhead

1.00

1.50

Fixed Overhead

0.40

2.25

Variable Marketing Expense

0.30

0.50

Fixed Administrative and Selling Expenses

0.15

0.15

The Plastics Division sells its commercial products at full production cost plus a 25% markup and believes the proprietary plastic component made for the Entertainment Division would sell for 6.25 per unit on the open market. Plastic Division and Entertainment Division negotiated and agreed at a transfer price of 5.50 per unit in 2016. The market price of the video card used by the Entertainment Division is 10.98 per unit. Entertainment Division and Video Card Division agreed to use market-based approach to set the transfer price for both segments. Transfer price is negotiated and finalized between divisions before January of succeeding year.

In October 2016, Panama Company, a company not affiliated with Parkside, approached Plastic Division and offered to purchase 20,000 units of Plastik Talaga at Plastic Divisions current selling price.

On the other hand, Nintendon Company approached Entertainment Division in November 2016 and pitched that they can supply video cards at 8.70 per unit at same volume that Video Card Division is currently supplying. If Entertainment Division opted to source from Nintendon Company, the Video Card Division will not be able to immediately find other customers who are willing to buy the brand sold to Entertainment Division. This may cause underproduction for Video Card Division indefinitely (until such time they find a customer that is willing to buy these video cards).

Average operating assets of the three divisions are as follows: Entertainment Division - 1,000,000; Plastic Division - 500,000; Video Cards Division - 675,000. Parkside, Inc. expects required return of 8% from all of its divisions.

If the managers of Entertainment Division and Plastic Division will meet in November 2016, what is the minimum amount per unit that Plastic Division will demand from Entertainment Division to be set as their transfer price for 2017?