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Materiais used by the Instrument Division of Ziegier Inc, are currentiy purchased from outside suppliers at a cost of $386 per unit. However, the same
Materiais used by the Instrument Division of Ziegier Inc, are currentiy purchased from outside suppliers at a cost of $386 per unit. However, the same materials are available from the Components Division. The Components Division has unused capaoty and can produce the materials needed by the Instrument Division at s variable cost of s320 per unit. Assume that a transfer price of $367 has been established and that 45,200 units of materlais are transferred, with no reduction in the Companents olvision's current sales. a. How much would Ziegler Inc's total operating income increase? b. How much would the Instrument Division's operating income increase? c. How much would the Components Oivision's operating income increase? s. d. Amy transfer price will cause the total income of the company to ias long as the supplier eivision capacity is toward making materials for products that are uttimately sold to the outside
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