Division A manufactures electronic circuit boards. The boards can be sold either
ID: 2478950 • Letter: D
Question
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:
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 $200 in additional variable cost per instrument and then sold the instruments for $640 each.
Prepare income statements for Division A, Division B, and the company as a whole.
please show work
Selling price per circuit board $181 Variable cost per circuit board $115 Number of circuit boards: Produced during the year 21,400 Sold to outside customers 15,000 Sold to Division B 6,400Explanation / Answer
Division A Division B Total Company Sales 3873400 (21400*181) 4096000 (6400*640) 7969400 Expenses Added by division 2461000 (21400*115) 1280000 6400*200 3741000 Transfer price paid 0 1158400 (6400*181) 1158400 Total Expenses 2461000 2438400 4899400 Net Operating Income 1412400 1657600 3070000