Decision on Transfer Pricing Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $336 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials neede by the Instrument Division at a variable cost of $279 per unit. Assume that a transfer price of $319 has been established and that 28,100 units of materials are transferred, with no reduction in the Components Division's current sales. a. How much would T_Kong Industries' total income from operations increase? b. How much would the Instrument Division's income from operations increase? C. How much would the Components Division's income from operations increase? as long as the supplier division capacity is used toward d. Any transfer price will cause the total income of the company to increase making materials for products that are ultimately sold to the outside. Decision on Transfer Pricing Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $345 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 $286 per unit. a. If a transfer price of $314 per unit is established and 28,100 units of materials are transferred, with no reduction in the Components Division's current sales, how much would T_Kong Industries' total income from operations increase? b. How much would the Instrument Division's income from operations increase? c. How much would the Components Division's income from operations increase? Residual Income The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested Assets Retail Division $92,000 Commercial Division 66,000 460,000 300,000 690,000 Internet Division 110,400 Assume that management has established a 8% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division $92,000 Commercial Division $66,000 Internet Division $110,400 Income from operations Minimum acceptable of income from operations Residual income b. Which division has the most residual income? Retail Division