Materials used by aro-products inc in producing division

Reference no: EM13615179

Materials used by Aro-Products Inc. in producing Division 3'sproduct are currently purchased from outside suppliers at a cost of$15 per unit. However, the same materials are available fromDivision 6. Division 6 has unused capacity and can produce thematerials needed by Division 3 at a variable cost of $12 per unit.A transfer price of $13 per unit is established, and 50,000 unitsof material are transferred with no reduction in Division 6'scurrent sales. How much would Division 3's income from operations increase?

Reference no: EM13615179

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