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Exercise 11-7 (Algo) Transfer Pricing from the Viewpoint of the Entire Company (L011-3) Division A manufactures electronic circuit boards. The boards can be sold either

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Exercise 11-7 (Algo) Transfer Pricing from the Viewpoint of the Entire Company (L011-3) 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 Selling price per circuit board $ 180 Variable cost per circuit board $ 114 Number of circuit boards Produced during the year 20,100 Sold to outside customers 15,400 sold to Division 4,700 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 $290 in additional variable cost per instrument and then sold the instruments for $680 each Required: 1. Calculate the net operating incomes earned by Division A, Dlvision B, and the company as a whole. 2. Assume Division A's manufacturing capacity is 20,100 circuit boards. Next year, Division B wants to purchase 5,700 circuit boards from Division A rather than 4,700. (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 1000 additional circuit boards to Division B or continue to sell them to outside customers

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