Question
Sharpe Company has multiple production divisions.Division C's raw materials are currently being purchased from outside suppliers for $21 per unit.Funny thing, the division could purchase
Sharpe Company has multiple production divisions.Division C's raw materials are currently being purchased from outside suppliers for $21 per unit.Funny thing, the division could purchase these materials from the company's Division R, because R has unused capacity and the ability to do the work.The company estimates it would take $17 in variable expenses to complete each unit.A transfer price of $18 is agreed upon.A) How much would Sharpe Company's total income from operating increase if an internal transfer of 50,000 units were made?B) How much would Division R's income from operations increase if the transfer were made?Show all of your computations below.
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