Answer Happy

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 $220 in additional variable
cost per instrument and then sold the instruments for $610
each.
Required:
1. Calculate the net operating incomes earned by Division A,
Division B, and the company as a whole.
2. Assume Division A’s manufacturing capacity is 20,900 circuit
boards. Next year, Division B wants to purchase 6,600 circuit
boards from Division A rather than 5,600. (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?