The materials used by the North Division of Zhang Company are currently purchased from outside suppliers at $61 per unit. These same materials are produced by Zhang’s South Division. The South Division can produce the materials needed by the North Division at a variable cost of $34 per unit. The division is currently producing 105,000 units and has capacity of 150,000 units. The two divisions have recently negotiated a transfer price of $48 per unit for 45,000 units. By how much will each division's income increase as a result of this transfer? South Division $fill in the blank 1 North Division $fill in the blank 2
The materials used by the North Division of Zhang Company are currently purchased from outside suppliers at $61 per unit. These same materials are produced by Zhang’s South Division. The South Division can produce the materials needed by the North Division at a variable cost of $34 per unit. The division is currently producing 105,000 units and has capacity of 150,000 units. The two divisions have recently negotiated a transfer price of $48 per unit for 45,000 units. By how much will each division's income increase as a result of this transfer? South Division $fill in the blank 1 North Division $fill in the blank 2
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 6BE
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The materials used by the North Division of Zhang Company are currently purchased from outside suppliers at $61 per unit. These same materials are produced by Zhang’s South Division. The South Division can produce the materials needed by the North Division at a variable cost of $34 per unit. The division is currently producing 105,000 units and has capacity of 150,000 units. The two divisions have recently negotiated a transfer price of $48 per unit for 45,000 units.
By how much will each division's income increase as a result of this transfer?
| South Division | $fill in the blank 1 |
| North Division | $fill in the blank 2 |
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