Exercise $11-7($Algo$)$ Transfer Pricing from the Viewpoint of the Entire Company $[$LO$11-3]$ Exercise $11-7($Algo$)$ Transfer Pricing from the Viewpoint of the Entire Company $[$LO$11-3]$

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:Variable cost per circuit board $ $116$

Number of circuit boards:

Produced during the year $20,500$

Sold to outside customers $14,300$

Sold to Division B $6,200$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 $$210$ in additional variable cost per

instrument and then sold the instruments for $$680$ each.

Required:

Calculate the net operating incomes earned by Division A$,$ Division B$,$ and the company as a whole.

Assume Division A$\text{'}$s manufacturing capacity is $20,500$ circuit boards. Next year, Division B wants to purchase $7,200$ circuit boards

from Division A rather than $6,200.($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?

Complete this question by entering your answers in the tabs below.

Assume Division A$\text{'}$s manufacturing capacity is $20,500$ circuit boards. Next year, Division B wants to purchase $7,200$ circuit

boards from Division A rather than $6,200.($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 B or continue to

sell them to outside customers?

Show less $4$

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:Variable cost per circuit board $ $ $116$

Number of circuit boards:

Produced during the year $20,500$

Sold to outside customers $14,300$

Sold to Division B$\}6,20$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 $$210$ in additional variable cost per

instrument and then sold the instruments for $$680$ each.

Required:

Calculate the net operating incomes earned by Division A$,$ Division B$,$ and the company as a whole.

Assume Division A$\text{'}$s manufacturing capacity is $20,500$ circuit boards. Next year, Division B wants to purchase $7,200$ circuit boards

from Division A rather than $6,200.($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?

Complete this question by entering your answers in the tabs below.

Calculate the net operating incomes earned by Division A$,$ Division B$,$ and the company as a whole.