The Burnaby Division of Columbia Ltd. produces and sells component parts. Its variable costs per unit are $80 for direct materials, $32 for direct labour and $18 for variable factory overhead. It currently can sell it components on the outside market at a price of $165/unit. Fixed overhead costs are $22 per unit based on a denominator volume of 180,000 units. The Surrey Division of Columbia Ltd. has approached the Burnaby Division and requested that it supply 25,000 units of the component at a transfer price of $150. Assuming Burnaby Division has no idle capacity, what is the minimum transfer price the Burnaby Division should agree to accept?

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Part 1 A. $165 B. $150 C. $152 D. $118 E. $130