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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 $ 1
Decision on transfer pricing
Materials used by the Instrument Division of Ziegler Inc. 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 Division's current sales, how much would Ziegler Inc.s total operating income increase?
fill in the blank of $
b How much would the Instrument Divisions operating income increase?
fill in the blank of $
c How much would the Components Division's operating income increase?
fill in the blank of $
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