Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Division A manufactures electronic circuit boards. The boards can be sold either to Division B ofthe same company or to outside customers. Last year, the
Division A manufactures electronic circuit boards. The boards can be sold either to Division B ofthe same company or to outside customers. Last year, the following activity occurred in Division A: Selling price per circuit board $ 182 Variable cost per circuit board $ 122 Number of circuit boards: Produced during the year 21,500 Sold to outside customers 15,700 Sold to Division B 5,800 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 $630 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 21,500 circuit boards. Next year, Division B wants to purchase 6,800 circuit boards from Division A rather than 5,800. (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? Complete this question by entering your answers in the tabs below. Required 2 Required 1 Calculate the net operating incomes earned by Division A, Division B, and the company as a whole. 7,567,000 Total expenses 0 O 0 Net operating income $ 3,913,000 $ 3,654,000 $ 7,567,000 Required 2 > $ 3,654,000 $ Required 1 Required 2 Assume Division A's manufacturing capacity is 21,500 circuit boards. Next year, Division B wants to purchase 6,800 circuit boards from Division A rather than 5,800. (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? Show IeSSA Continue to sell the additional 1,000 circuit boards to outside customers. OSell the 1,000 additional circuit boards to Division B
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