Decision on transfer pricing

Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $$255$ per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $$212$ per unit.

a$.$ If a transfer price of $$232$ per unit is established and $38,500$ units of materials are transferred, with no reduction in the Components Division's current sales, how much would Ziegler Inc.$\text{'}$s total operating income increase?

b$.$ How much would the Instrument Division's operating income increase?

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c$.$ How much would the Components Division's operating income increase?

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TCheck My Work variable cost, or the market price and transfer cost. Then, multiply the difference by the units transferred.