[madkis0320]

A chair manufacturer has two divisions: framing and upholstering. The framing costs are $100 per chair and the upholstering costs are $200 per chair. The company makes 5,000 chairs each year, which are sold for $500.
Required:
a. What is the profit of each division if the transfer price is $150?
b. What is the profit of each division if the transfer price is $200?

Answer:
a. Profit for framing cost- $50
Profit for upholstering- 150

b. Profit for framing cost- $100
Profit for upholstering- 100

[Perito]

a. Correct.

b. Correct.