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Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside customers. Last year,
Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A: 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 $200 in additional variable cost per instrument and then sold the instruments for $680 each. Prepare income statements for Division A, Division B, and the company as a whole. Assume that Division A's manufacturing capacity is 21,100 circuit boards. Next year, Division B wants to purchase 7,800 circuit boards from Division A rather than 6,800. (Circuit boards of this type are not available from outside sources.) What should Division A do from the standpoint of the company as a whole? Sell the 1,000 additional circuit boards to Division B. Continue to sell the circuit boards to outside customers
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