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Decision on Transfer Pricing Materials used by the Instrument Division of T _ Kong Industries are currently purchased from outside suppliers at a cost of
Decision on Transfer Pricing
Materials used by the Instrument Division of TKong Industries are currently purchased from outside suppliers at a cost of $ 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 $ per unit.
a If a transfer price of $ per unit is established and units of materials are transferred, with no reduction in the Components Divisions current sales, how much would TKong Industries total income from operations increase?
$fill in the blank
b How much would the Instrument Divisions income from operations increase?
$fill in the blank
c How much would the Components Divisions income from operations increase?
$fill in the blank
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