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The Machining Division has a capacity of 2,000 units. Its sales and cost data are:...

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Accounting

The Machining Division has a capacity of 2,000 units. Its sales and cost data are:
Selling price per unit
$100
Variable manufacturing costs per unit
$25
Variable administrative costs per unit
$5
Total fixed manufacturing overhead
$20,000
Total fixed administrative costs
$5,000
If the assembly divisions is currently buying from an outside supplier at $98 per unit, what will be the effect on overall company profits if internal sales of 2000 units from Machining to Assembly take place at the optimum transfer price?

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