The materials used by the Toms River Division of Jadelis Company are currently purchased from outside suppliers

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The materials used by the Toms River Division of Jadelis Company are currently purchased from outside suppliers at $35 per unit. These same materials are produced by Jadelis’s Racine Division. The Racine Division can produce the materials needed by the Toms River Division at a variable cost of $22 per unit. The division is currently producing 60,000 units and has capacity of 80,000 units. The two divisions have recently negotiated a transfer price of $28 per unit for 20,000 units. By how much will each division’s income increase as a result of this transfer?

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Accounting

ISBN: 978-0324401844

22nd Edition

Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac

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