Answered step by step
Verified Expert Solution
Question
1 Approved Answer
2 Exerclse 11A-2 Transfer Pricing from the Vlewpolnt of the Entire Company [L011-5] 10 Division A manufactures electronic circuit boards. The boards can be sold
2 Exerclse 11A-2 Transfer Pricing from the Vlewpolnt of the Entire Company [L011-5] 10 Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside points customers. Last year, the following activity occurred in Division A: elling price per circuit board per circuit board $ 182 $ 119 Variable cost Number of circuit boards: eBook Produced during the year Sold to outside customers Sold to Division B 21,e0e 14,688 6,480 Hint Sales to Division B were at the same price as sales to outside customers. The circuit boards purchased by Division B were used in an electronic instrument manufactured by that division (one board per instrument). Division B incurred $230 in additional variable cost per instrument and then sold the instruments for $650 each Print Required: Rencs1 Prepare income statements for Division A, Division B, and the company as a whole. 2. Assume Division A's manufacturing capacity is 21,000 circuit boards. Next year, Division B wants to purchase 7,400 circuit boards from Division A rather than 6,400. (Circuit boards of this type are not available from outside sources.) From the standpoint of the company as a whole, should Division A sell the additional 1,000 circuit boards to Division B or continue to sell them to outside customers? Complete this question by entering your answers in the tabs below Required 1Required 2 Prepare income statements for Division A, Division B, and the company as a whole. B Total Sales Added by the division Transfer price paid Net operating income Required 2>
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started