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Materials used by Square Yard Products Inc. in producing Division 3's product are currently purchased...

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Accounting

Materials used by Square Yard Products Inc. in producing Division 3's product are currently purchased from outside suppliers at a cost of $5 per unit. However, the same materials are available from Division 6. Division 6 has unused capacity and can produce the materials needed by Division 3 at a variable cost of $3 per unit. A transfer price of $3.20 per unit is established, and 40,000 units of material are transferred, with no reduction in Division 6's current sales.

How much will Division 3's income from operations increase?

a.$32,000

b.$50,000

c.$72,000

d.$150,000

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