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:

Selling price per circuit board	$	179
Variable cost per circuit board	$	123
Number of circuit boards:
Produced during the year		21,000
Sold to outside customers		14,700
Sold to Division B		6,300

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 $680 each.

Required:

1. Calculate the net operating incomes earned by Division A, Division B, and the company as a whole.

2. Assume Division As manufacturing capacity is 21,000 circuit boards. Next year, Division B wants to purchase 7,300 circuit boards from Division A rather than 6,300. (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 1,000 additional circuit boards to Division B or continue to sell them to outside customers?

• Required 1
• Required 2

Calculate the net operating incomes earned by Division A, Division B, and the company as a whole.

Required 1

	Division A	Division B	Total Company
Sales
Expenses:
Added by the division
Transfer price paid
Total expenses
Net operating income

Required 2

• Assume Division As manufacturing capacity is 21,000 circuit boards. Next year, Division B wants to purchase 7,300 circuit boards from Division A rather than 6,300. (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?

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  	Continue to sell the additional 1,000 circuit boards to outside customers.radio button unchecked1 of 2 Sell the 1,000 additional circuit boards to Division B.