Decision on Transfer Pricing

Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $405 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 $336 per unit.

Assume that a transfer price of $385 has been established and that 41,700 units of materials are transferred, with no reduction in the Components Divisions current sales.

a. How much would T_Kong Industries' total income from operations increase? $fill in the blank 1

b. How much would the Instrument Division's income from operations increase? $fill in the blank 2

c. How much would the Components Division's income from operations increase? $fill in the blank 3