Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers...
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Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $234 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 $194 per unit. Assume that a transfer price of $222 has been established and that 43,400 units of materials are transferred, with no reduction in the Components Division's current sales. a. How much would T_Kong Industries' total income from operations increase? $ b. How much would the Instrument Division's income from operations increase? $ c. How much would the Components Division's income from operations increase? / d. Any transfer price will cause the total income of the company to increase as long as the supplier division capacity is used toward making materials for products that are ultimately sold to the outside
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