Exercise 11-7 (Algo) Transfer Pricing from the Viewpoint of the Entire Company [LO11-3] Division A manufactures electronic circuit boards that can be sold 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 Number of circuit boards: Produced during the year Sold to outside customers Sold to Division B $188 $ 115 20,900 15,200 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 $250 in additional variable cost per instrument and then sold the instruments for $700 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 20,900 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 selling them to outside customers? 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 20,900 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 selling them to outside customers? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the net operating incomes earned by Division A, Division B, and the company as a whole. Sales Expenses: Added by the division Transfer price paid Division A Division B Total Company Total expenses 0 0 0 Net operating income $ 0 $ 0 $ 0 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 20,900 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 selling them to outside customers? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assume Division A's manufacturing capacity is 20,900 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 selling them to outside customers? Continue to sell the additional 1,000 circuit boards to outside customers Sell the 1,000 additional circuit boards to Division B. Show less A