(a) Prepare the profit statement for each division and for the company overall under the current situation. (7 marks)(b) Prepare the revised profit statement for each division and for the company overall if the MD were to proceed to buy 25,000 units from the ED at RM112.50 per unit. (8 marks)(c) Based on the calculations in parts (a) and (b) above, advise whether the ED should accept the MD proposal. (3 marks)(d) Based on the calculations in parts (a) and (b) above, suggest ANY TWO (2) possible considerations that could persuade the ED to accept the MD proposal. (4 marks)(e) Explain THREE (3) financial impact of external purchase on Telegraphic Berhad. (3 marks)[Total: 25 marks]

Question Telegraphics Bhd., a cellular communication company, has multiple divisions. Each division's management is rewarded based on that division's operating income. The company's Mobile Division (MD) currently purchases 25,000 units of cellular equipment from outside suppliers and uses them to produce communication systems. One of the company's divisions, the Electron Division (ED). produces a similar cellular equipment that it sells to outside customers but not to MD. The senior manager of the MD has approached the ED's management with a proposal to buy the equipment from them. If ED produces the cellular equipment that the MD requires, the ED will not incur variable marketing costs of RM12 per unit. Relevant Information about the ED: (1) Sells 50,000 units of equipment to outside customers at RM135 per unit. (2) Operating capacity is currently at 80 percent, and the division can perform at 100 percent. (3) Variable manufacturing costs are RM105 per unit. (4) Variable marketing costs are RM12 per unit. (5) Fixed manufacturing costs are RM870,000. Calculation of profit per unit for MD (assuming the parts are purchased outside, not from ED) is shown as follows: RM RM Sales revenue 480 Manufacturing cost: Cellular equipment (external purchase) 120 Other materials 15 Fixed costs 60 Total manufacturing costs (195) Gross margin 285 Marketing costs: Variable 53 Fixed 22 (75) Operating income 210 The MD is proposing to buy 25,000 units of the cellular equipment from the ED at RM1 12.50 per unit