Materials Used by Jefferson Company in Producing Division C's Product

question 4

Multiple Choice

Materials used by Jefferson Company in producing Division C's product are currently purchased from outside suppliers at a cost of $10.00 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.​
-Jefferson Company's total operating income will increase by

• A)$37,500
• B)$100,000
• C)$62,500
• D)$150,000

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A formal change or addition proposed or made to a document, statute, or legal contract.

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