(Answered) Elmira manufacturing inc has two divisions division a and

Accounting

Elmira Manufacturing Inc. has two divisions, Division A and Division B. Division A produces car stereos that it sells to retail stores for a price of $82per unit. Its full capacity is at230,000units but it currently sells 200,000 units. It incurs the following costs in its production:

Direct materials	$36
Direct labour	$23
Variable overhead	$10
Fixed overhead	$4

Division B is purchasing15,000units of the same car stereos from an outside supplier for $74per unit.

1. Calculate the minimum transfer price Division A is willing to accept.

2. Determine the effect on the net income of Division A.

3.Determine the effect on the net income of Division B

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