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By how much will each division income increase

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Problem - The materials used by the Winston-Salem Division of Fox Company are currently purchased from outside suppliers at $30 per unit. These same materials are produced by Fox's Flagstaff Division. The Flagstaff Division can produce the materials needed by the Winston-Salem Division at a variable cost of $15 per unit. The division is currently producing 70,000 units and has capacity of 100,000 units. The two divisions have recently negotiated a transfer price of $22 per unit for 30,000 units. By how much will each division's income increase as a result of this transfer?

Reference no: EM132776065

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