Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The machining division of ITA International has a capacity of 2,150 units. Its sales and cost data are: Selling price per unit $80 25 Variable
The machining division of ITA International has a capacity of 2,150 units. Its sales and cost data are: Selling price per unit $80 25 Variable manufacturing costs per unit Variable selling costs per unit 3 Total fixed manufacturing overhead 183,700 The machining division is currently selling 1,950 units to outside customers, and the assembly division of ITA International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $3/unit. If the assembly division is currently buying from an outside supplier at $73 per unit, what will be the effect on overall company profits if internal sales for 400 units take place at the optimum transfer price? The company profits would increase by $ $ 11600
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started