Please help with all parts. Thank you. Division A manufactures electronic circui

Question

Please help with all parts. Thank you.

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: $ 195 119 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 28,800 15,300 5,500 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 $260 in additional variable cost per instrument and then sold the instruments for $670 each. Required: 1. Prepare income statements for Division A, Division B, and the company as a whole. 2. Assume Division A's manufacturing capacity is 20,800 circuit boards. Next year, Division B wants to purchase 6,500 circuit boards from Division A rather than 5,500. (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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare income statements for Division A, Division B, and the company as a whole. Division A Division B Total Company Sales Expenses: Added by the division Transfer price paid Total expenses Net operating income Ocontinue to sell the additional 1,000 circuit boards to outside customers. Osell the 1,000 additional circuit boards to Division B.

Explanation / Answer

1 Income Statements for Division A and Division B Amount $ Division A Division B Number if Units Sold           20,800             5,500 Selling Price               195               670 Total Sales Value       4,056,000       3,685,000 Less Variable Cost per Circuited Board     (2,475,200)     (1,430,000) Less Transfer Price from Div. A     (1,072,500)       1,580,800       1,182,500 Less Fixed Cost                 -                   -   Net Income for Each Division       1,580,800       1,182,500 Note Assumed the Transfer price as $195/- A B 2 Selling Price 195 670 Variable Cost -119 -260 Transfer Price -195 Contribution Per Unit 76 215 Conclusion : Division A shall sale the units to Davison B as , Contribution per Unit is High for Division B , it will maximizes the Organisation profits

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