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Division A manufactures electronic circuit boards. The boards can be sold either to Division El of the same company or to outside customers. Last year,
Division A manufactures electronic circuit boards. The boards can be sold either to Division El of the same company or to outside customers. Last year, the following activity occurred in Division A: Selling price per circuit board 35 1?B Variable cost per circuit board 35 129 Number of circuit boards: Produced during the year 21,200 Sold to outside customers 15,300 Sold to Division B 5,480 Sales to Division B were at the same price as sales to outside customers. The circuit boards purchased by Division El were used in an electronic instrument manufactured by that division [one board per instrument). Division B incurred $300 in additional variable cost per instrument and then sold the instruments for $690 each. Required: 1. Calculate the net operating incomes earned by Division A, Division B, and the company as a whole. 2. Assume Division A's manufacturing capacity is 21,200 circuit boards. Next year, Division El wants to purchase 6,400 circuit boards from Division A rather than 5,400. {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 1,000 additional circuit boards to Division El or continue to sell them to outside customers? Complete this question by entering your answers in the labs below. Required 1 Required 2 Calculate the net operating inonmes earned by Division A, Division B, and the oompanyr as a whole. Expenses: Added by the division Transfer price paid Total expenses Nel operating income Required 2 > Required 1 Required 2 Assume Division A's manufacturing capacity is 21,200 circuit boards. Next year, Division B wants to purchase 6,400 circuit boards from Division A rather than 5,401]. (Circuit boards of this type are not available from outside sources.) From the standpoint of the company:r as a whole, should Division A sell the additional 1,000 circuit boards to Division B or continue to sell them to outside customers? Show less; OContinue to sell the additional 1,000 circuit boards to outside customers. OSeII the 1,001] additional circuit boards to Division B.
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