Question
ActFast Ltd is a company that manufactures and sells a wide range of laptops to both domestic and international market. It has two divisions, i.e.
ActFast Ltd is a company that manufactures and sells a wide range of laptops to both domestic and international market. It has two divisions, i.e. Assembly Division and Battery Division. Battery Division sells batteries to both Assembly Division and to other laptop manufacturers. Assembly Division could also purchase batteries from other suppliers.
The following data is available for both divisions:
Assembly Division |
|
Selling price for each laptop, including battery | $1,800 |
Costs per laptop: |
|
Battery from battery Division | $130 |
Other materials | $450 |
Variable overheads | $350 |
Annual production and sales of laptops | 150,000 units |
Maximum annual external sales for laptops | 180,000 units |
Battery Division |
|
Transfer price per battery sold to Assembly Division | $130 |
Selling price per battery to external customers | $140 |
Variable costs per battery (see Note*) | $70 |
Current maximum production capacity | 350,000 units |
Maximum potential external sales | 220,000 units |
(Note*) Battery Division saves a variable overhead of $5 per battery if sold internally.
Additional Information:
- Assembly Division purchases various parts for the laptops from local suppliers. These parts are usually packed in sealed plastic bags and come in cartoon boxes. The plastic bags are disposed of as normal rubbish in the rubbish bins while cartoon boxes are sold to a nearby recycling company.
- Battery Division uses a lot of chemical in manufacturing laptop batteries. Some of these chemicals are treated in its own waste treatment plant before disposal while others are sold to chemical recycling company. Apart from chemicals, Battery Division is also consuming high volume of electricity in its manufacturing processes.
- The marketing director is planning to launch a new model of laptop, LS100, in six-months time. It is near completion in its design stage. The purpose of LS100 is to compete with a close competitor. The selling price of the competing laptop is $2,500 and the marketing director believes the launching price of LS100 could be in the range of $2,200 to $2,400. During the recent progress report, the laptop design engineers stated that the new laptop needs to incorporate some new features as this is necessary in order to stay ahead of competition. However, this would mean additional costs to be incurred.
Required:
- Discuss how ActFast Ltd can benefit from implementing an environmental management accounting. You need to draw relevant examples from the case given. A minimum of TWO benefits are expected. (Max 250 words; 5 marks)
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