Exercise 11-7 (Static) 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 B of the same company or to outside customers. Last year, the following activity occurred in Division A: 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 $100 in additional varlable cost per instrument and then sold the instruments for $300 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 20,000 circult boards. Next year, Division B wants to purchase 5,000 circuit boards from Division A rather than 4,000. (Clicult 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 seil them to outside customers? Complete this question by entering your answers in the tabs below. 1. Calculate the net operating incomes eamed by Division A, Division B, and the company as a whole. 2. Assume Division A's manufacturing capacity is 20,000 circuit boards. Next year, Division B wants to purchase 5,000 circuit boards from Division A rather than 4,000. (Circuit boards of this type are not avallable 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? Complete this question by entering your answers in the tabs below. Calculate the net operating incomes earned by Division A, Division B, and the company as a whole. Required: 1. Calculate the net operating incomes eamed by Division A, Division B, and the company as a whole. 2. Assume Division A's manufacturing capacity is 20,000 circuit boards. Next year, Division B wants to purchase 5,000 circuit board from Division A rather than 4,000 . (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? Complete this question by entering your answers in the tabs below. Assume Division A's manufacturing capacity is 20,000 circuit boards. Next year, Division B wants to purchase 5,000 circuit boards from Division A rather than 4,000 . (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 additional 1,000 circuit boards to Division B or continue to sell 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
