Decision on transfer pricing Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $389 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 $323 per unit. a. If a transfer price of $354 per unit is established and 35,600 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? X . How much would the Instrument Division's operating income increase? c. How much would the Components Division's operating income increase?

Division A, which is operating at capacity, produces a component that currently sells in a competitive market for $42 per unit. At the current level of production, the fixed cost of producing this component is $11 per unit and the variable cost is $11 per unit. Division B would like to purchase this component from Division A. The price that Division A should charge Division B for this component is: Multiple Choice $11 per unit. $22 per unit. $36 per unit. $42 per unit. $53 per unit.

Determining Market-Based and Negotiated Transfer Prices Carreker, Inc., has a number of divisions, including the Alamosa Division, producer of surgical blades, and the Tavaris Division, a manufacturer of medical instruments. Alamosa Division produces a 2.5 cm steel blade that can be used by Tavaris Division in the production of scalpels. The market price of the blade is $25. Cost information for the blade is: Variable product cost $ 9.40 Fixed cost 5.00    Total product cost $14.40 Tavaris needs 18,000 units of the 2.5 cm blade per year. Alamosa Division is at full capacity (84,000 units of the blade). Required: 1. If Carreker, Inc., has a transfer pricing policy that requires transfer at market price, what would the transfer price be?$ fill in the blank 1per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer at that price?   2. Now suppose that Carreker, Inc., allows negotiated transfer pricing and that Alamosa Division can avoid $1.50 of selling…

QRC Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below:     Alternative A   Alternative B Projected revenue $ 125,000     $ 150,000   Unit-level costs   25,000       36,000   Batch-level costs   12,500       24,000   Product-level costs   15,000       17,000   Facility-level costs   10,000       12,500       What is the differential revenue for this decision? Multiple Choice   $50,000   $25,000   $125,000   $150,000