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I know the answer for required 2, I just need this required 1 section completed. Exercise 110 (Algo) Transfer Pricing from the Viewpoint of the
I know the answer for required 2, I just need this required 1 section completed.
Exercise 110 (Algo) Transfer Pricing from the Viewpoint of the Entire Company [L0113] Division A manufactures electronic circuit boards. The boards can be sold either to Division B ofthe same company or to outside customers. Last year, the following activity occurred in Division A: 20, soo IS, 100 circuit bcarci Variable cost per circuit board Nurrher of circuit bcarcis: Produced during the year Scia tc customers Sold to Division B 114 s, 400 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 $630 each Required: 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 20,500 circuit boards Next year, Division B wants to purchase 6,400 circuit boards from Division A rather than 5,400. (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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