Decision on Transfer Pricing

Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $447 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 $371 per unit.

a. If a transfer price of $407 per unit is established and 34,800 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? $

b. How much would the Instrument Divisions operating income increase? $

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