Decision on transfer pricing Materials used by the Instrument Division of XPort Industries are currently...
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Accounting
Decision on transfer pricing
Materials used by the Instrument Division of XPort Industries are currently purchased from outside suppliers at a cost of $400 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 $332 per unit.
Assume that a transfer price of $380 has been established and that 22,600 units of materials are transferred, with no reduction in the Components Divisions current sales.
a. How much would XPort 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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