The Pole Division produces poles which can be sold to outside customers or transferred to the Flag Division. The following data are available for last year's activities in the Pole Division:

Capacity in units 400,000 poles

Outside demand 380,000 poles

Demand by Flag Division 25,000 poles

Selling price $5.00

Variable cost $2.75

Total fixed costs $200,000

On a transfer to the Flag Division, the Pole Division can save $0.65 of the variable costs per unit transferred. HINT: Figure out the opportuning cost for the 5,000 units and average over the total units transferred.

		$2.55
		$5.00
		$2.10
		$4.35
		$2.75