The materials used by Hibiscus Company's Division A are currently purchased from an outside supplier at $52 per unit. Division B is able to supply Division A with 20,700 units at a variable cost of $48 per unit. The two divisions have recently negotiated a transfer price of $46 per unit for the 20,700 units. Enter an increase as a positive number and a decrease as a negative number. a. By how much will each division's income increase as a result of this transfer? Division A $ Division B $ b. What is the total increase in income for Hibiscus Company?
The materials used by Hibiscus Company's Division A are currently purchased from an outside supplier at $52 per unit. Division B is able to supply Division A with 20,700 units at a variable cost of $48 per unit. The two divisions have recently negotiated a transfer price of $46 per unit for the 20,700 units. Enter an increase as a positive number and a decrease as a negative number. a. By how much will each division's income increase as a result of this transfer? Division A $ Division B $ b. What is the total increase in income for Hibiscus Company?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The materials used by Hibiscus Company's Division A are currently purchased from an outside supplier at $52 per unit. Division B is able to supply Division A with 20,700 units at a variable cost of $48 per unit. The two divisions have recently negotiated a transfer price of $46 per unit for the 20,700 units. Enter an increase as a positive number and a decrease as a negative number.
a. By how much will each division's income increase as a result of this transfer?
| Division A | $ |
| Division B | $ |
b. What is the total increase in income for Hibiscus Company?
$
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