Division a Sells Ground Veal Internally to Division B, Which

question 142

Multiple Choice

Division A sells ground veal internally to Division B, which in turn, produces veal burgers that sell for $12 per pound. Division A incurs costs of $5.25 per pound while Division B incurs additional costs of $11.50 per pound.
What is Division A's operating income per burger, assuming the transfer price of the ground veal is set at $7.00 per burger?

• A) $1.75
• B) $2.25
• C) $8.75
• D) $4.50