Decision on Transfer Pricing Materials used by the Instrument Division of Ziegler Inc. are currentiy...
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Decision on Transfer Pricing Materials used by the Instrument Division of Ziegler Inc. are currentiy purchased from outside suppliers at a cost of $265 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $220 per unit. a. If a transfer price of $241 per unit is established and 33,600 units of materials are transferred, with no reduction in the Components Division's current sales, how much would Ziegler Inci's total operating income increase? 4 b. How much would the Instrument Division's operating income increase? \$ c. How much would the Components Division's operating income increase
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