The materials used by the Hibiscus Company Division A are currently purchased fr

Question

The materials used by the Hibiscus Company Division A are currently purchased from outside supplier at $55 per unit. Division B is able to supply Division A with 24,100 units at a variable cost of $49 per unit. The two divisions have recently negotiated a transfer price of $50 per unit for the 24,100 units. By how much will each division's income and the company's total income change as a result of this transfer? Enter an increase as a positive number and a decrease as a negative number. Change in income for Division A Change in income for Division B Total change in income for Hibiscus Company PreviouS All work saved, Email Instructor or Submit Test for Grading 6-32 PM

Explanation / Answer

Change in Income for Division A = 24100*(55 - 50) = $120,500

Change in Income for Division B = 24100*(50 - 49) = $24,100

Total change in income for Hibiscus Company = 120500 + 24100 = $144,600

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