Syarikat Aman Damai Sdn Bhd (ADSB) produces electric components. ADSB has twodivisions, Division X and Division Y. Twenty percent (20%) of product produced byDivision X are sold to Division Y and the remainder are sold to outside market. ADSBpolicy requires the divisions to use variable cost as transfer price. Currently, Division Xoperates at maximum capacity of 100,000 units and sells to both Division Y and outsideas follows:Sales(-) Variable costsContribution marginDivision YRM450,000RM450,000RM0Outside marketRM4,000,000RM1,800,000RM2,200,000Division X has an opportunity to increase the total sales for outside market by 20,000units provided that the additional sales is at RM75 selling price. Division Y, on the otherhand, can alternatively purchase its requirements from outside supplier at a price ofRM85 per unit.REQUIRED:(a) Calculate the impact on Division X's contribution margin if it accepts the newopportunity.(b) Calculate the impact on contribution margin for ADSB if Division X accepts thenew opportunity.

Contribution Margin: The contribution margin is the difference between the selling price and the…

Answered: Syarikat Aman Damai Sdn Bhd (ADSB)…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The materials used by Hibiscus Company Division A are currently purchased from outside supplier at $53 per unit. Division B is able to supply Division A with 12,400 units at a variable cost of $47 per unit. The two divisions have recently negotiated a transfer price of $48 per unit for the 12,400 units. (a) By how much will each division's income increase as a result of this transfer? Enter an increase as a positive number and a decrease as a negative number. Division A $fill in the blank 1 Division B $fill in the blank 2 (b) What is the total increase in income for Hibiscus Company? $fill in the blank 3
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $355,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products based on their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product A a С Selling Price $ 21.00 per pound $15.00 per pound $27.00 per gallon Product A D C Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below. Additional Processing Costa $ 73,440 Quarterly Output 13,200 pounds 20,600 pounds 4,400 gallons $ 105,620 $ 46,000 Selling Price $26.20 per pound $ 21.20 per pound $35.20 per gallon Required: 1. What is the financial advantage (disadvantage) of further processing each of the…
Subject-accounting
Ms. Jones wants to make 8% nominal interest compounded quarterly on a bond investment. She has an opportunity to purchase a 6%, $10,000 bond that will mature in 15 years and pays quarterly interest. Thismeans that she will receive quarterly interest payments on the face value of the bond ($10,000) at 6% nominal interest. After 15 years she will receive the face value of the bond. How much should she be willing to pay for the bond today?
Transfer pricingMogi Corp. manufactures one primary product, which is processed through two divisions (P and R). Costs for each division are: P R Variable cost per gallon $3 $15 Fixed cost per gallon* 2 12 * Based on production of 75,000 and 120,000 gallons for P and R respectively. P Division produces 75,000 gallons per month. R Division uses 120,000 gallons per month; of that, 75,000 gallons are purchased internally and 45,000 are purchased externally at $10 per gallon. After processing through R Division, a gallon of final product can be sold for $55.a. What would be P’s transfer price to R Division if the price is set at 180 percent of variable cost? $Answer b. What would be P’s transfer price to R Division if the price is set at 130 percent of full cost? $Answer c. What would be P’s transfer price to R Division if the price is set at market value? $Answer d. What is Mogi Corp.’s operating profit if all 120,000 gallon of final product can be sold for $55 per…
Transfer pricingMogi Corp. manufactures one primary product, which is processed through two divisions (P and R). Costs for each division are: P R Variable cost per gallon $3 $15 Fixed cost per gallon* 2 12 * Based on production of 25,000 and 40,000 gallons for P and R respectively. P Division produces 25,000 gallons per month. R Division uses 40,000 gallons per month; of that, 25,000 gallons are purchased internally and 15,000 are purchased externally at $10 per gallon. After processing through R Division, a gallon of final product can be sold for $55.a. What would be P’s transfer price to R Division if the price is set at 180 percent of variable cost? Answer: 5.4 b. What would be P’s transfer price to R Division if the price is set at 130 percent of full cost? Answer: 6.5 c. What would be P’s transfer price to R Division if the price is set at market value? Answer: 10 d. What is Mogi Corp.’s operating profit if all 40,000 gallon of final product can be sold for $55…
LuLu Ltd has two divisions: Pulp Division and Paper Division. The Pulp Division produces paper pulp which the Paper Division purchases to produce toilet paper. The following information relates to the production of paper pulp. Pulp Division $800.00 Market price of paper pulp per metric ton Variable costs per metric ton: -Processing cost -Marketing cost Fixed cost per metric ton $375.00 $75.00 $15.00 The Pulp division has a monthly capacity of 1,000 metric tonnes of paper pulp, of which 750 tonnes are sold internally and 250 tonnes are sold externally. Due to a sudden surge in demand for toilet paper, Paper division now requires an extra 125 tonnes of paper pulp from Pulp Division. Calculate the transfer price of one metric ton of paper pulp using the general transfer-pricing formula. Select one: a. $450.00 b. $800.00 c. $375.00 O d. $440.00 e. $425.00
A4
Denver Fabricators manufactures products DF1 and DF2 from a joint process, which also yields a by-product, BP. The company accounts for the revenues from its by-product sales as other income. Additional information follows: Units produced Allocated joint costs Sales value at split-off DF1 DF2 BP DF1 27,300 ? DF2 18,300 ? $ 563,250 $ 187,750 Joint Cost BP 15,300 ? $ 102,300 Total Required: Assuming that joint product costs are allocated using the net realizable value at split-off approach, what joint costs are allocated to each of the joint products DF1 and DF2 and to the by-product, BP? Note: Do not round intermediate calculations. 60,900 $ 560,300 $ 853,300
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answer in text form please (without image)
Carol Components operates a Production Division and a Packaging Division. Both divisions are evaluated as profit centers. Packaging buys components from Production and assembles them for sale. Production sells many components to third parties in addition to Packaging. Selected data from the two operations follow: Capacity (units) Sales price Variable costsb Fixed costs a For Production, this is the price to third parties. b For Packaging, this does not include the transfer price paid to Production. Suppose Production is located in Country A with a tax rate of 30 percent and Distribution in Country B with a tax rate of 10 percent. All other facts remain the same. a. Optimal transfer price b. Transfer price c Transfer price Required: a. Current output in Production is 25,300 units. Packaging requests an additional 5,960 units to produce a special order. What transfer price would you recommend? to search b. Suppose Production is operating at full capacity. What transfer price would you…

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