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C to be transferred to Division B at the marginal cost of $ 1 0 per unit of C and that Division B must buy

C to be transferred to Division B at the marginal cost of $10 per unit of C and that Division B must buy all the C it needs from Division S.
to 1,000 units more than the sales volume currently budgeted for next year for Division S.
Budgeted data, taken from the Freshwave Group, for the divisions for the next year are as follows:
Division S' Income Statement ($)
Sales
Variable cost of sales
Contribution
Fixed Costs (controllable)
Profit
Other information for Division S
Production/Sales (units)
External demand (units)
Capacity (units)
External market price per unit
Capital employed
Cost of capital charge
Division B' Income Statement ($$)
Sales
Variable cost of sales
Contribution
Fixed Costs (controllable)
Profit
Other information for Division B
Production/Sales (units)
Capacity (units)
External market price per unit
Capital employed
Cost of capital charge
of which are transferred to Division B)
3,000(only 2,000 of which can be currently satisfied)
5,000
$20
$60,000
10%
270,000
114,000?
156,000
100,000?
56,000?
3,000
7,000
$90
$110,000
10%
follows:
Proposed Policy
there are concerns about problems that could arise by granting such autonomy.
Part A
measures for each division.
(16 marks)
(b) Measure the performance of the divisions and the Group, which would arise as a result of altering the transfer price to $20 per unit.
(7 marks)
managers.
(6 marks)
)
located in Country Z, a developing country.
and (ii) Division S to sell externally at any quantity; provided that the divisions work together to optimize the profits of Freshwave as a whole.
Required:
could be acceptable to both divisions. Support your proposal with profit computations of the divisions and the group.
(12 marks)
(b) Discuss any non-financial factors that may be relevant towards the decision of outsourcing the remote control from Controlclip.
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