Sawmill, Inc.s Virginia Division is currently purchasing a part from an outside supplier. The company's Maryland Division, which has no excess capacity, makes and sells this part for external customers at a variable cost of $41 and a selling price of $64. If Maryland begins sales to Virginia, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by $5. On the basis of this information, Maryland would establish a minimum acceptable transfer price of:

a. $41

b. $64

c. $36

d. $59