Question
Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $211 per unit. However, the same
Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $211 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 $175 per unit.
a. If a transfer price of $192 per unit is established and 24,100 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? $
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