Materials used by Jefferson Company in producing Division C's product are currently purchased fromoutside suppliers at a cost of $10 per unit. However, the same materials are available from Division A. DivisionA has unused capacity and can produce the materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of $9.50 per unit is negotiated and 25,000 units of material are transferred, with no reduction in Division A's current sales.

1.How much would Division C's income from operations increase?

A. $0

B. $75,000

C. $12,500

D. $50,000

2.How much would Division A's income from operations increase?

A. $0

B. $75,000

C. $25,000

D. $50,000

3.How much would Jefferson's total income from operations increase?

A. $37,500

B. $100,000

C. $62,500

D. $150,000