Division A of Aztec Manufacturing purchases materials to be used in production from an outside...
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Accounting
Division A of Aztec Manufacturing purchases materials to be used in production from an outside supplier for $20 per unit. The same materials are produced by Division B. Division B incurs variable costs of $10 per unit. Currently, Division B is not able to sell all that it produces. In this situation, if a transfer price of $18 per unit is established between the two divisions and 80,000 units of materials are transferred to Division A, by what amount would Division A's operating income increase? a.$320,000 b.$640,000 c.$800,000 d.$160,000
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