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Decision on transfer pricing Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $ 3

Decision on transfer pricing
Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $359 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 $298 per unit.
Assume that a transfer price of $341 has been established and that 34,200 units of materials are transferred, with no reduction in the Components
Division's current sales.
a. How much would Ziegler Inc.'s total operating income increase?
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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