Business, 07.06.2020 03:00 tiffanyjadeb

Materials used by Square Yard Products Inc. in producing Division 3's product are currently purchased from outside suppliers at a cost of $5.00 per unit. However, the same materials are available from Division 6. Division 6 has unused capacity and can produce the materials needed by Division 3 at a variable cost of $3.00 per unit. A transfer price of $3.20 per unit is established, and 40,000 units of material are transferred, with no reduction in Division 6's current sales. How much would Division 3's income from operations increase?
a. $150,000
b. $50,000
c. $32,000
d. $72,000

How much would Division 6's income from operations increase?
a. $8,000
b. $15,000
c. $80,000
d. $150,000

How much would Square Yard Products total income from operations increase?
a. $32,000
b. $112,000
c. $80,000
d. $150,000

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