JasNav Inc. has two divisions, the Electronics Division and the Sub$-$Assembly Division.

$$

The Electronics Division manufactures circuit boards for electronic components. One of the parts it manufactures is circuit board CB$136,$ which has a selling price of $$40$ on the market. The part has a variable unit cost of $$26$ and a fixed cost of $$8$ per unit based on full use of capacity. It is currently producing and selling $350,000$ units of its $450,000$ unit capacity to customers outside of JasNav.

$$

The Sub$-$Assembly Division manufactures electronic components used in automotive parts. One of its components, the SR$20,$ includes a circuit board that is similar to the CB$136.$

Currently, the division buys circuit boards from outside suppliers at a cost of $$35$ per unit. In the manufacture of SR$20,$ the Sub$-$Assembly Division adds an additional $$18$ of variable costs, applies $$7$ of fixed costs and sells the completed component for $$75.$ If a transfer took place between divisions, the Sub$-$Assembly Division could use $100,000$ units of part CB$136$ and would also continue to add the additional variable costs.

$$

Required:

$$

What is the income $($loss$)$ for each of the divisions and the company as a whole under each of the following independent situations?

There is no change to the existing situation. $(2$ marks$)$The CB$136$ units are transferred to the Sub$-$Assembly Division at the Electronics Division$$s market price. $(2$ marks$)$The CB$136$ units are transferred to the Sub$-$Assembly Division at $110\%$ of the Electronics Division$$s full cost. $(2$ marks$)$The CB$136$ units are transferred to the Sub$-$Assembly Division at the Sub$-$Assembly Division$$s market price. $(2$ marks$)$The CB$136$ units are transferred to the Sub$-$Assembly Division at the Electronics Division$$s variable cost. $(2$ marks$)$

$$

Now assume the Electronics Division is operating at its capacity of $450,000$ before fulfilling the demand of the Sub$-$Assembly Division. What is the income $($loss$)$ for each division and the company as a whole under each of the following independent situations?

No transfer takes place. $(3$ marks$)$The units are transferred to the Sub$-$Assembly Division at the Electronics Division$$s market price. $(3$ marks$)$

$$

Based on your answers to parts a$)$ and b$),$ briefly discuss the following:

Whether CB$136$ should be transferred to the Sub$-$Assembly Division $(2$ marks$)$

The transfer price and the overall profitability for the company $(2$ marks