Decision on Transfer Pricing

Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $329 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 $273 per unit.

a. If a transfer price of $299 per unit is established and 39,600 units of materials are transferred, with no reduction in the Components Divisions current sales, how much would T_Kong Industries total income from operations increase? $____

b. How much would the Instrument Divisions income from operations increase? $____

c. How much would the Components Divisions income from operations increase? $____