Wildhorse Manufacturing Inc. has two divisons, Division A and Division B. Division A produces car stereos that it sells to retail stores for a price of $89 per unit. Its full capacity is 257,500 units, but it currently sells 225,500 units. It incurs the following costs in its production:

Direct Materials $36, Direct Labour $25, Variable overhead $14, Fixed overhead $7

Division B is purchasing 15,200 units of the same stereo from an outside supplier for $81 per unit.

a) Calculate the minimum transfer price Division A is willing to accept: Minimum transfer price $____

b) Determine the effect on the net income of Division A at the price determined in part a. Net income increase $____

c) Determine the effect on the net income of Division B at the price determined in part a. Net income increase $____