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Decision on Transfer Pricing Materials used by the Instrument Division of XPort Industries are currently purchased from outsi
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Answer #1
a) total income from operations increase
total income = (210-160)*60000 = 3000000
2) cost of market purchase = (60000*210) = 12600000
component division cost = (60000*190) = 11400000
instrument division income = 12600000-11400000
instrument division income = 1200000
c) component division income
sale revenue = (60000*190) = 11400000
variable cost = (60000*160) = 9600000
component division income = 11400000-9600000
component division income = 1800000

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