Spillburgh Media develops media campaigns for a variety of clients. The Internet group is working on a website and needs 40 production hours to produce a video clip. Spillburgh’s Video group provides...

Spillburgh Media develops media campaigns for a variety of clients. The Internet group is working on a website and needs 40 production hours to produce a video clip. Spillburgh’s Video group provides these services to both in-house projects and outside clients. The Video group’s variable costs are $800 per production hour; it charges outside clients $1,500 per production hour. Based on a capacity of 5,000 production hours, the Video group’s fixed costs are $400 per production hour. The Video group currently has only 4,800 production hours scheduled. What is the minimum transfer price that will maximize corporate profits?

a. $400 per production hour

b. $800 per production hour

c. $1,200 per production hour

d. $1,500 per production hour