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 $ 195 $ 126 20,100 15,800 4,300 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 pe instrument and then sold the instruments for $670 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 20,100 circuit boards. Next year, Division B wants to purchase 5.300 circuit boards from Division A rather than 4,300. (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 Division A Division B Total Company Transfer price paid Total expenses 0 ° Net operating income $ $ 0 $ 0 Required Required 2 >
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 $ 195 $ 126 20,100 15,800 4,300 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 pe instrument and then sold the instruments for $670 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 20,100 circuit boards. Next year, Division B wants to purchase 5.300 circuit boards from Division A rather than 4,300. (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 Division A Division B Total Company Transfer price paid Total expenses 0 ° Net operating income $ $ 0 $ 0 Required Required 2 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
am.104.
Transcribed Image Text: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
$ 195
$ 126
20,100
15,800
4,300
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 pe
instrument and then sold the instruments for $670 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 20,100 circuit boards. Next year, Division B wants to purchase 5.300 circuit boards
from Division A rather than 4,300. (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
Division A
Division B
Total Company
Transfer price paid
Total expenses
0
°
Net operating income
$
$
0
$
0
Required
Required 2 >
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