Answer:
$25,000
Explanation:
The minimum transfer of price that would maximize and optimize the group profit is the relevant variable cost of production.
Any price paid by Division C to an outside supplier higher than the minimum transfer would reduce the group's profit and vice versa.
Also, a transfer price higher that the variable cost would increase the profit of the transferring Division provided it has unused capacity
Hence, Division A's profit would increase by difference between its variable cost and the transfer price
Minimum transfer = Variable cost per unit= $8.50
Increase in Division A profit = (Transfer price - Variable cost)× units sold
= (9.50 - 8.50) × 25,000
=$25,000