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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 $190
Variable cost per circuit board $126
Number of circuit boards:
Produced during the year 21,700
Sold to outside customers ,14,700
Sold to Division B7,000
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 $280 in additional variable cost per
instrument and then sold the instruments for $650 each.
Required:
Calculate the net operating incomes earned by Division A, Division B, and the company as a whole.
Assume Division A's manufacturing capacity is 21,700 circuit boards. Next year, Division B wants to purchase 8,000 circuit boards
from Division A rather than 7,000.(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?
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