Division A manufactures electronic circuit boards. The boards can be sold either to Division B of...

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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: Selling price per circuit board $ 180 Variable cost per $ 118 circuit board Number of circuit boards: Produced during the 20,400 year Sold to outside customers 15,300 5,100 Sold to Division B 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 $680 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 20,400 circuit boards. Next year, Division B wants to purchase 6,100 circuit boards from Division A rather than 5,100. (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? 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: Selling price per circuit board $ 180 Variable cost per $ 118 circuit board Number of circuit boards: Produced during the 20,400 year Sold to outside customers 15,300 5,100 Sold to Division B 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 $680 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 20,400 circuit boards. Next year, Division B wants to purchase 6,100 circuit boards from Division A rather than 5,100. (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?

Answer rating: 100% (QA)

2 Unit 20400 5100 Sold Sales 3672000 3468000 Costs Variable Cost 2407200 918000 ... View the full answer