Decision on transfer pricing Materials used by the Instrument Division of Ziegler Inc. are...
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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 $ 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 $ per unit. a If a transfer price of $ per unit is established and 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? b How much would the Instrument Division's operating income increase? X c How much would the Components Division's operating income increase? Feedback TCheck My Work variable cost, or the market price and transfer cost. Then, multiply the difference by the units transferred. 
Decision on transfer pricing
Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $ 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 $ per unit.
a If a transfer price of $ per unit is established and 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?
b How much would the Instrument Division's operating income increase?
X
c How much would the Components Division's operating income increase?
Feedback
TCheck My Work variable cost, or the market price and transfer cost. Then, multiply the difference by the units transferred.
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