Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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,

image text in transcribed

image text in transcribedimage text in transcribed

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: $ $ 191 116 Selling price per circuit board Variable cost per circuit board Number of circuit boards: Produced during the year Sold to outside customers Sold to Division B 21,100 15,400 5,700 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 $270 in additional variable cost per instrument and then sold the instruments for $650 each. Required: 1. Prepare income statements for Division A, Division B, and the company as a whole. 2. Assume Division As manufacturing capacity is 21,100 circuit boards. Next year, Division B wants to purchase 6,700 circuit boards from Division A rather than 5,700. (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 1 Required 2 Prepare income statements for Division A, Division B, and the company as a whole. Division A Division B Total Company Sales Expenses: Added by the division Transfer price paid Total expenses Net operating income Required 1 Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assume Division A's manufacturing capacity is 21,100 circuit boards. Next year, Division B wants to purchase 6,700 circuit boards from Division A rather than 5,700. (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 less A Continue to sell the additional 1,000 circuit boards to outside customers. Sell the 1,000 additional circuit boards to Division B. Required 1 Required 2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Taxation Of Individuals And Business Entities 2015

Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

6th Edition

978-1259206955, 1259206955, 77862368, 978-0077862367

Students also viewed these Accounting questions