Ideal Homes Corporation
The Carpet Division of Ideal Homes Corporation manufactures a single grade of residential grade carpeting. The division has the capacity to produce 500,000 square yards of carpet each year. Its current costs and revenues are shown here:
The Housing Division currently purchases 40,000 yards of carpeting (of the grade produced by the Carpet Division) each year at a cost of $6.50 per square yard from an outside vendor.
Refer to Ideal Homes Corporation. If the Housing and Carpet Divisions agree on the internal transfer of 40,000 square yards of carpet at a price of $4.50 per square yard, how will the profits of the Housing Division be affected?

Question

Ideal Homes Corporation
The Carpet Division of Ideal Homes Corporation manufactures a single grade of residential grade carpeting. The division has the capacity to produce 500,000 square yards of carpet each year. Its current costs and revenues are shown here:
  The Housing Division currently purchases 40,000 yards of carpeting (of the grade produced by the Carpet Division) each year at a cost of $6.50 per square yard from an outside vendor.
Refer to Ideal Homes Corporation. If the Housing and Carpet Divisions agree on the internal transfer of 40,000 square yards of carpet at a price of $4.50 per square yard, how will the profits of the Housing Division be affected?

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The Answer of Ideal Homes Corporation
The Carpet Division of Ideal Homes Corporation manufactures a single grade of residential grade carpeting. The division has the capacity to produce 500,000 square yards of carpet each year. Its current costs and revenues are shown here:
  The Housing Division currently purchases 40,000 yards of carpeting (of the grade produced by the Carpet Division) each year at a cost of $6.50 per square yard from an outside vendor.
Refer to Ideal Homes Corporation. If the Housing and Carpet Divisions agree on the internal transfer of 40,000 square yards of carpet at a price of $4.50 per square yard, how will the profits of the Housing Division be affected?

Ideal Homes Corporation The Carpet Division of Ideal Homes Corporation Manufactures a Single