Kuttans Woods has two divisions: Maritime Division and Shore Division. Shore Division, which has excess capacity, makes a part N95 at a variable cost of $45 per unit and sells it to external customers at $70 per unit. The part, N95, can also be used by Maritime Division. Maritime Division can purchase the same part from an outside supplier for $72 per unit. If Shore Division commences sales to Maritime Division, it will (i) use the general rule that allows the Shore Division to be as well off as if the part were sold to the external customers, and (ii) be able to reduce the variable cost by $4 on internal transfers. If external sales are not affected, Shore Division should establish a transfer price of:
Select one:
a. $70
b. $41
c. $45
d. $72