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10 Task Performance 1

This document contains two homework cases involving financial analysis and calculations for business divisions within companies. Case 1 involves the audio and hi-fi divisions of Japs Company, including the costs and market prices of speakers. Students are asked to calculate minimum and maximum transfer prices between divisions from both divisions' perspectives. Case 2 provides cost information for Josh Corporation's fertilizer spreaders and asks students to calculate total cost per unit, desired return on investment per unit, markup percentage, and target selling price based on a 25% desired return on investment. Rubrics are also provided for problem solving and short answer questions.

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0% found this document useful (0 votes)

523 views2 pages

10 Task Performance 1

Uploaded by

Shai Gomez

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

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BM1915

NAME: DATE: SCORE:

HOMEWORK

Answer the following items on a separate sheet of paper. Show your computations as necessary. (12
items x 5 points)

Case 1
Japs Company’s Audio Division produces a speaker that is used by manufacturers of various audio products.
The following data pertaining to the speaker are available to the company:

Selling price per unit in the outside market P3,000

Variable costs per unit 2,100
Fixed costs per unit (based on capacity) 400
Capacity in units 25,000

Japs Company has a Hi-Fi division that could use this speaker in one of its products. The Hi-Fi Division will
need 5,000 speakers per year. It has received a quote of P2,850 per speaker from another manufacturer. Japs
Company evaluates division managers on the basis of divisional profits.

Required: Answer the questions given the following assumptions: (8 items x 5 points)

Assumption 1: Audio Division is now selling only 20,000 speakers per year to outside customers.

1. From the standpoint of the Audio Division, what is the minimum price that it is willing to accept for
speakers sold to Hi-fi Division?
2. What range of transfer price the managers of both divisions should agree to?
3. If left free to negotiate without interference, would you expect the division managers to voluntarily agree
to the transfer of 5,000 speakers from Audio Division to Hi-Fi Division? Why or why not?
4. From the standpoint of the whole company, should the transfer take place? Why or why not?

Assumption 2: Audio Division is selling all the speakers it can produce to outside customers.

5. From the standpoint of the Audio Division, what is the minimum price that it is willing to accept for
speakers sold to Hi-fi Division?
6. From the standpoint of the Hi-Fi Division, what is the maximum transfer price it is willing to accept for
the speakers acquired from the Audio Division?
7. If left free to negotiate without interference, would you expect the division managers to voluntarily agree
to the transfer of 5,000 speakers from Audio Division to Hi-Fi Division? Why or why not?
8. From the standpoint of the whole company, should the transfer take place? Why or why not?

Case 2
Josh Corporation produces commercial fertilizer spreaders. The following information is available for Josh’s
anticipated annual volume of 400,000 units.

Per unit Total

Direct materials P42
Direct labor 54
Variable manufacturing overhead 72
Fixed manufacturing overhead P12,000,000
Variable selling and administrative expenses 84
Fixed selling and administrative expenses 7,200,000

The company is using a desired ROI of 25%. It has invested assets of P144,000,000.