Assume the same information as Question 9, except that the Plastics Division has available capacity of 10,000 units for plastic moldings. What is the minimum transfer price that the Plastics Division should accept?

Data from Question 9

The Plastics Division of Weston Company manufactures plastic molds and then sells them to customers for $70 per unit. Its variable cost is $30 per unit, and its fixed cost per unit is $10. Management would like the Plastics Division to transfer 10,000 of these molds to another division within the company at a price of $40. The Plastics Division is operating at full capacity.

What is the minimum transfer price that the Plastics Division should accept?

(a) $10.

(b) $30.

(c) $40.

(d) $70.