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

Capacity inunits400,000 wood pieces

Outsidedemand380,000 wood pieces

Demand by FlagDivision25,000 wood pieces

Sellingprice$5.00

Variable cost$2.75

Total fixedcosts$200,000

On a transfer to the paper Division, the wood Division can save $0.65 of the variable costs per unit transferred. What is the lowest transfer price per unit?HINT:Figure out the opportunity cost for the 5,000 units and average over the total units transferred.