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Pearson Education of Management Accounting_13

Tham khảo tài liệu 'pearson education of management accounting_13', kinh doanh - tiếp thị, quản trị kinh doanh phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | EXERCISES 405 b Suggest three different non-financial measures of performance that may be appropriate to an operating division and consider how such measures in general offer improvements when used in conjunction with financial measures. 10.3 You have recently taken a management post in a large divisionalised business. A substantial proportion of the business of your division is undertaken through inter-divisional transfers. Required a What are the objectives of a system of transfer pricing b Describe the use of and problems associated with transfer prices based on variable cost and full cost. c Where an external market exists to what extent is market price an improvement on cost 10.4 The following information applies to the planned operations of Division A of ABC Corporation for next year Sales revenue 100 000 units at 12 1 200 000 Variable cost 100 000 units at 8 800 000 Fixed cost including depreciation 250 000 Division A investment at original cost 500 000 The minimum desired rate of return on investment is the cost of capital of 20 per cent a year. The business is highly profit-conscious and delegates a considerable level of autonomy to divisional managers. As part of a procedure to review planned operations of Division A a meeting has been convened to consider two options Option X Division A may sell a further 20 000 units at 11 to customers outside ABC Corporation. Variable costs per unit will be the same as budgeted but to enable capacity to increase by 20 000 units one extra piece of equipment will be required costing 80 000. The equipment will have a four-year life and the business depreciates assets on a straight-line basis. No extra fixed costs will occur. Option Y Included in the current plan of operations of Division A is the sale of 20 000 units to Division B also within ABC Corporation. A competitor of Division A from outside ABC Corporation has offered to supply Division B at 10 per unit. Division A intends to adopt a strategy of matching the price