The materials used by the Harmony Division of Kirtland Company are currently purchased from outside suppliers at

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The materials used by the Harmony Division of Kirtland Company are currently purchased from outside suppliers at $80 per unit. These same materials are produced by the Nauvoo Division. The Nauvoo Division can produce the materials needed by the Harmony Division at a variable cost of $65 per unit. The division is currently producing 130,000 units and has capacity of 160,000 units. The two divisions have recently negotiated a transfer price of $72 per unit for 15,000 units. By how much will each division’s income increase as a result of this transfer?

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Financial And Managerial Accounting

ISBN: 9780357714041

16th Edition

Authors: Carl S. Warren, Jefferson P. Jones, William Tayler

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