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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 Selling price per circuit board Variable cost per circuit board $190 116 Number of circuit boards: Produced during the year Sold to outside customers 21,000 15,300 Sold to Division B 5,700 Sales to Division B were at the same price as sa Division B were used in an electronic instrument manufactured by that division. (one board per instrument) Division B incurred $210 in additional variable cost per instrument and then sold the instruments for $700 each les to outside customers. The circuit boards purchased by Requirement 1: Prepare income statements for Division A?Division B, and the company as a whole (input all amount as positive value. Leave no cells blank-be certain to enter "" wherever required. Omit the "S" sign in your response.) Division A Division B Total Sales Expenses Added by the division Transfer price paid Total expenses Net operating income Requirement 2 Assume that Division A's manufacturing capacity is 21,000 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 1,000 additional circuit boards to Division B or continue to sell them to outside customers? Click to select)
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