What amount would beta division operating income increase

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Reference no: EM132657628

Problem 1: The Alpha Division of Blue Orchid Inc. purchases materials to be used in production from an outside supplier for $30 per unit. The same materials are produced by the Beta Division. Beta Division incurs variable costs of $15 per unit. Currently, Beta Division is able to sell only 290,000 units to outside buyers out of 360,000 units produced. In this situation, if a transfer price of $27 per unit is established between the two divisions and 70,000 units of materials are transferred to Alpha Division, by what amount would Beta Division's operating income increase?

Reference no: EM132657628

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