Transfer Pricing The materials used by the North Division of Horton Company are currently purchased from outside suppliers at $102 per unit. These same materials are produced by Horton’s South Division. The South Division can produce the materials needed by the North Division at a variable cost of $46 per unit. The division is currently producing 154,000 units and has capacity of 220,000 units. The two divisions have recently negotiated a transfer price of $70 per unit for 66,000 units. By how much will each division's income increase as a result of this transfer? South Division $ North Division $

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Transfer Pricing The materials used by the North Division of Horton Company are currently purchased from outside suppliers at $102 per unit. These same materials are produced by Horton’s South Division. The South Division can produce the materials needed by the North Division at a variable cost of $46 per unit. The division is currently producing 154,000 units and has capacity of 220,000 units. The two divisions have recently negotiated a transfer price of $70 per unit for 66,000 units. By how much will each division's income increase as a result of this transfer?

South Division $

North Division $

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