The materials used by Hibiscus Company's Division A are currently purchased from an outside supplier at $54 per unit. Division B is able to supply Division A with 10,900 units at a variable cost of $49 per unit. The two divisions have recently negotiated a transfer price of $50 per unit for the 10,900 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 $54 per unit. Division B is able to supply Division A with 10,900 units at a variable cost of $49 per unit. The two divisions have recently negotiated a transfer price of $50 per unit for the 10,900 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?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...

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