Materials used by the Instruments Division of Madison Inc. are currently purchased from an outside supplier at a cost of $$1350$ per unit. The same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instruments Division at a variable cost of $$900$ per unit. Assume that a transfer price of $$1200$ per unit has been agreed by each division and that $75,000$ units of materials are transferred. with no reduction in the Components Division's current sales.

How much would Madison's Inc. total opetating income increase?

How much would the Instruments Divisions operating income increase?

How much would the Components Division operating income increase?

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