Materials used by Jefferson Company in producing the Division C's product are currently purchased from outside suppliers at a cost of $10 per unit. However, the same materials are available from Division A. Division A has unused capacity and can produce the materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of $9.50 per unit is negotiated and 25,000 units of material are transferred, with no reduction in Division A's current sales. How much will Jefferson's total income from operations increase?
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Home » Business » Materials used by Jefferson Company in producing the Division C's product are currently purchased from outside suppliers at a cost of $10 per unit. However, the same materials are available from Division A.