Division A manufactures electronic circuit boards. The boards can be sold either to Division B...
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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 Variable cost per circuit board Number of circuit boards $ 191 $ 121 Produced during the yean Sold to outside customers Sold to Division B 21,606 14,4ee 7,200 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 $240 in additional variable cost per instrument and then sold the instruments for $610 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 21,600 circuit boards. Next year, Division B wants to purchase 8,200 circuit boards from Division A rather than 7,200. (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
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