Exercise 11-7 (Algo) Transfer Pricing from the Viewpoint of the Entire Company (LO11-3) Division A manufactures electronic circuit boards. The boards can be sold either to Division of the same company or to outside customers. Last year, the following activity occurred in Division A: 178 111 $ 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 21,600 14,400 7,200 Sales to Division B were at the same price as sales to outside customers. The circuit boards purchased by Division 3 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 $620 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 21,600 circuit boards. Next year, Division B wants to purchase 8,200 circuit boards from Division A rather than 7,200. (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? Required 1 Required 2 Calculate the net operating incomes earned by 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 0 0 0 $ 0 $ 0 $ 0