A transfer price of 13 per unit is established and 50000


Materials used by Aro-Products Inc. in producing Division 3'sproduct are currently purchased from outside suppliers at a cost of$15 per unit. However, the same materials are available fromDivision 6. Division 6 has unused capacity and can produce thematerials needed by Division 3 at a variable cost of $12 per unit. A transfer price of $13 per unit is established, and 50,000 units of material are transferred with no reduction in Division 6'scurrent sales. How much would Division 3's income from operations increase?

a. $150,000

b. $50,000

c. $0

d. $100,000

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Accounting Basics: A transfer price of 13 per unit is established and 50000
Reference No:- TGS0598176

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