Respuesta :
Answer:
Multiple choices for the first question are:
a)$2,650,000
b)$ 1,350,000
c) $1,300,000
The correct answer to the first question is A,$2,650,000
Instrument's division net income from operations increases by $1,350,000
Component's division net income from operations increases by $1,300,000
Explanation:
Instruments' division
The increase in instrument's division net income is computed thus:
Outside purchase price $175
internal transfer price ($148)
Savings from buying internally $27
Total savings from buying internally(50,000*$27)=$1,350,000
The instrument's division income from operations would increase by $1,350,000 as a result of buying from the Components' division
Components' division
The increase in instrument's division net income is computed thus:
transfer price to instruments' division $148
variable cost of internal transfer ($122)
Increase in profits from operations per unit $26
Total increase in profits (50,000*$26)=$1,300,000
The component's division income from operations would increase by $1,350,000 as a result of selling to instruments' division
Total increase in T-kong industries=$1,350,000+$1,300,000=$2,650,000
