Question: Division A manufactures components for plasma TVs. The components can be sold either to Division B of the same company or to outside customers. Last

 Division A manufactures components for plasma TVs. The components can be

Division A manufactures components for plasma TVs. The components can be sold either to Division B of the same company or to outside customers. Last year, the following activity was recorded in Division A. Sales to Division B were at the same price as sales to outside customers. The components purchased by Division B were used in a TV manufactured by that division Division B incurred $720 in additional variable cost per TV and sold all the TVs manufactured for $1,650 each. a) Complete the income statements for last year for Division A, Division Bz and the company as a whole. b) Assume that Division A's manufacturing capacity is 2$,000 components per year. Next year, Division B wants to purchase 6,000 components from Division A, rather than only 5,000 components as in last year. (Components 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 components to Division B, or should it continue to sell them to outside customers? Division A should sell to

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!