Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

What is he total company sales? I got it wrong Return to question 2 Exercise 11A-2 Transfer Pricing from the Viewpoint of the Entire Company

image text in transcribedWhat is he total company sales? I got it wrong
image text in transcribed
Return to question 2 Exercise 11A-2 Transfer Pricing from the Viewpoint of the Entire Company [LO11-5 10 points Division A manufactures electronic circuilt 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 Selling price per elreult board 179 Variable cost per cirouit board 110 Number of cirouit boards Produced daring the year Sold to outside custoners Sold to Division B 21,500 14,600 6,900 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 $240 in additional variable cost per instrument and then sold the instruments for $650 each. Required: 1. Prepare income statements for Division A, Division B, and the company as a whole. 2. Assume Division A's manufacturing capacity Is 21,500 circuit boards. Next year, Division B wants to purchase 7,900 circuit boards from Division A rather than 6,900. (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 8 or continue to sell them to outslde customers

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started