Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher

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Evaluate Transfer Pricing System
Mississippi Company has two decentralized divisions, Illinois and Iowa. Illinois always has purchased certain units from Iowa at $30 per unit. Because Iowa plans to raise the price to $40 per unit, Illinois is considering buying these units from outside suppliers for $30 per unit. Iowa's costs follow:

Required
If Illinois buys from an outside supplier, the facilities that Iowa uses to manufacture these units will remain idle. What will be the result if Mississippi enforces a transfer price of $40 per unit between Illinois and Iowa