Question
The materials used by Hibiscus Company's Division A are currently purchased from an outside supplier at $52 per unit. Division B is able to supply
The materials used by Hibiscus Company's Division A are currently purchased from an outside supplier at $52 per unit. Division B is able to supply Division A with 16,100 units at a variable cost of $50 per unit. The two divisions have recently negotiated a transfer price of $49 per unit for the 16,100 units. Enter an increase as a positive number and a decrease as a negative number.
a. By how much will each division's income increase as a result of this transfer?
Division A $_____
Division B $_____
b. What is the total increase in income for Hibiscus Company?
$______
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