Question: =+PE 24-6A Transfer pricing obj. 5 EE 24-6 p. 1106 The materials used by the Kenosha Division of Ehrlich Company are currently purchased from outside

=+PE 24-6A Transfer pricing obj. 5 EE 24-6 p. 1106 The materials used by the Kenosha Division of Ehrlich Company are currently purchased from outside suppliers at $75 per unit. These same materials are produced by the High Point Division. The High Point Division can produce the materials needed by the Kenosha Division at a variable cost of $55 per unit. The division is currently producing 140,000 units and has capacity of 175,000 units. The two divisions have recently negotiated a transfer price of $65 per unit for 30,000 units. By how much will each division’s income increase as a result of this transfer?

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