By how much will each division''s income increase as a

By how much will each division''s income increase as a result

Reference no: EM131912904

Problem

The materials used by the Winston-Salem Division of Fox Company are currently purchased from outside suppliers at $65 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 $27 per unit. The division is currently producing 133,000 units and has capacity of 190,000 units. The two divisions have recently negotiated a transfer price of $41 per unit for 57,000 units.

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

Reference no: EM131912904

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