4:26 PM 47 اساس 49% Required: 1. Prepare a reaponsibility cost report for the Engineering Division for the month of Harch, 1988. Use format that will lead to a fair evaluation of the division's performance. 2. If you were Mr. Ed Reyes immediate superior, how would you, interpret the responsibility cost report for his division in March? ice of The Toy supply a the requi follow 488 Part 2/Systems & Techniques for Analysis, Planning & Control Chapt The Toys Division refuses to accept the proposed transfer price since it 16 much higher than the regular price charged to outside customers. Bags states, however, that it really wants to sell the bags to the external market at P24 to earn its desired mark-up, though. it cannot charge the same amount, because of the keen competition. Required: Answer the following independent items. Support your answer with computations and/or explanation. 1. At how much should the transfer price be set? 2. Assume that another company offers to supply Toys its plastic bags requirement at a special price of P19, subject to the condition that Toys would not consider other suppliers and instead buy exclusively from that company. Should Malabon Plastac's top management allow Toys to buy from that supplier? What course of action should be taken, particularly with regards to the transfer price? 3. Assume that the market price for plastic bage shows a decreasing trend in the external market, and it is anticipated to reach even so Low as P14. At how much should the transfer price be set? Prepare computations that you may present to the Bags Division's manager to convince him that your suggested transfer price is indeed acceptable. P10-4. Transfer Pricing. The Navotas. Electronics Corporation operates in decentralized set up, treating its line divisions as separate profit centers. One of Navotas profit centers, the Switch Division, manufactures awitches which it sells to external customers at a price of P5 each. This selling price yields profit of P2 per unit because his manufacturing costs per unit of product is P3, computed as follows: Variable cost Fixed cost (based on normal capacity of 40,000 units) Full production cost P2 1 Just recently, another division of Navotas Electronics, the Transistor Division, signified its intention to purchase 10,000 units of the Switch Division's product. Translater presently buys his requirements from outside suppliers at P4 each. However, considering the advantages of buying from within the company itself, he now wants to purchase the units from Switch and offers a price of P4. Required: 1. If Switch Division agrees to transfer the units at a price of P4 to Transistor, what would be the effect of this decision in the operating profit of the company as a whole? 2. Assume that idle. capacity existe in the Switch Division, determine the minimum transfer price that Switch Division would be willing to accept without affecting the operating profit of Navotas Electronics as a whole. P10-5- Sellin which During of wh market The proces Divisi Under units varieb Requi 1. 2. 3, Authorize the system to edit this file. I+ Authorize X Edit Annotate Fill & Sign Convert All