question archive The materials used by the Burlington Division of Wilson Company are currently purchased from outside suppliers a $100 per unit

The materials used by the Burlington Division of Wilson Company are currently purchased from outside suppliers a $100 per unit

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The materials used by the Burlington Division of Wilson Company are currently purchased from outside suppliers a $100 per unit. These same materials are produced by the Racine Division. The Racine Division cart produce the materials needed by the Burlington Division at a variable cost of $70 per unit. The division is currently producing 160,000 units and has capacity of 200,000 units. The two divisions have recently negotiated a transfer price of $85 per unit for 40,000 units. By how much will each division’s income increase as a result of this transfer?
 

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