Division South does not have excess capacity to produce Product Y. The division can sell Product Y for $10 per unit outside the company. Variable costs are $6 per unit. Division North wants to purchase Product Y from Division South to use in Product ZZ. The selling price of Product ZZ is $25 per unit and variable costs to finish the product after the transfer are $12 per unit. An outside supplier will sell Product Y for $12 per unit. What is the maximum price Division North will pay for Product Y?
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