Reference no: EM132974541

Problem - Grayline industries has several divisions. The Eastern Division can produce 3,000 units of product X at the following costs: $75/unit variable costs and $70/unit fixed costs. Eastern sells units of X in the outside market for $180/unit. The Canadian Division can use product X in its manufacturing process. If Canadian spends $80 of variable cost per unit to process X further, it can sell the resulting product Y for $200/unit.

Canadian can acquire product X from an outside supplier for $100 per unit.

Required - Show your work for ANY credit.

If Eastern Division charges $90 per unit to sell 1,000 units of Product X to the Canadian Division and sells 2,000 units to the outside market, what is Eastern's total contribution margin (not contribution margin per unit) for the period?

What is the total contribution margin Canadian will earn on its purchases from Eastern Division at the transfer price of $90 per unit?