The Mary Company primarily sells dishes, and recently purchased a cardboard box company.

Mary's new cardboard box division sells 30,000 boxes to outside customers. The variable cost of each box is $1.50 and usually has a contribution margin of $0.80 per box. Management of Mary's dish division has decided it would like the box division to provide it with boxes.

Assuming that Mary's box division has excess capacity to provide all the boxes to the dish division without any loss in sales to outside customers, what is the minimum transfer price the box division should find as acceptable?

Select one:

a. $2.40

b. $0.60

c. $1.50

d. $0.80