Question
Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $243 per unit. However, the same
Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $243 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 $202 per unit.
a. If a transfer price of $221 per unit is established and 21,100 units of materials are transferred, with no reduction in the Components Division's current sales, how much would Ziegler Inc.s total operating income increase? fill in the blank 1 of 1$
b. How much would the Instrument Divisions operating income increase? fill in the blank 1 of 1$
c. How much would the Components Division's operating income increase? fill in the blank 1 of 1$
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