Transfer pricing

The materials used by the Harmony Division of Kirtland Company are currently purchased from outside suppliers at $$80$ per unit. These same materials are produced by the Nauvoo Division. The Nauvoo Division can produce the materials needed by the Harmony Division at a variable cost of $$65$ per unit. The division is currently producing $130,000$ units and has capacity of $160,000$ units. The two divisions have recently negotiated a transfer price of $$72$ per unit for $15,000$ units.

By how much will each division's income increase as a result of this transfer?

Nauvoo Division $$ Harmony Division