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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 $2.56 per
Decision on Transfer Pricing Materials used by the instrument Division of Ziegler Inc, are currently purchased from outside suppliers at a cost of $2.56 per unit, However, the same. materials are available from the Components Division. The Components Division has unused capadty and can produce the materials needed by the Instrument Division at a variable cost of $212 per unit. a. If a transfer price of $233 per unit is established and 27,000 units of materials are transferred, with no reduction in the Components Divislon's current sales, how much would Ziegler tnc: s total ogerating income increase? b. How much would the Instrument Division's operating income increase? c. How much would the Components Division's operating income increase
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