What is Division A's operating income per pound, assuming the transfer price of the soybean paste is set at $1.25 per pound

ACCOUNTING

Multiple Choice

Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound while Division B incurs additional costs of $2.50 per pound.

What is Division A's operating income per pound, assuming the transfer price of the soybean paste is set at $1.25 per pound?

a. $0.500

b. $0.875

c. $1.250

d. $1.625

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