Square Yard Products Inc. in producing Division 3\'s product are currently purch

Question

Square Yard Products Inc. in producing Division 3's product are currently purchased from outside suppliers at a cost of $5 per unit. However, the same materials are available from s has unused capacity and can produce the materials needed by Division 3 at a variable cost of $3 per unit. A transfer price of $3.20 per unit is established, and 40,000 units of materi are transferred, with no reduction in Divislon 6's current sales. How much would Square Yard Products total income from operations increase? a $150,000 b.$32,000 c.$80,000 0 d$112,000

Explanation / Answer

Therefore, Savings is $ 80,000 (Option C)

Purchase Price per unit $            5.00 Variable cost per unit $            3.00 Savings $            2.00 No. of Units 40000 Total savings $ 80,000.00

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