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can i have a answer for (a) and (b)? QUESTION 2 (25 MARKS) Silver Division and Gold Division are two divisions in the SG group
can i have a answer for (a) and (b)?
QUESTION 2 (25 MARKS) Silver Division and Gold Division are two divisions in the SG group of companies. Silver Division manufactures one type of component which it sells to external customers and also to Gold Division. Details of Silver Division are as follows: Market price per component Variable cost per component Fixed costs Demand from Gold Division Capacity RM200 RM105 RM1,375,000 per period 20,000 components per period 35,000 components per period Gold Division assembles one type of product which it sells to external customers. Each unit of that product requires two of the components that are manufactured by Silver Division. Details of Gold Division are as follows: RM800 Selling price per unit Variable cost per unit: Two components from Silver Other variable costs Fixed costs 2 @ transfer price RM250 RM900,000 per period 10,000 units per period 10,000 units per period Demand Capacity Group Transfer Pricing Policy Transfers must be at opportunity cost. Gold must buy the components from Silver. Silver must satisfy demand from Gold before making external sales Required: a. Calculate the profit for each division if the external demand per period for the components that are made by Silver Division is 15,000 components (12 marks) b. Calculate the financial impact on the Group if Gold Division ignored the transfer pricing policy and purchased all of the 20,000 components that it needs from an external supplier for RM170 each. Your answer must consider the impact of 15,000 Component demand from external customers for the component manufactured by Silver Division. (6 marks)Step by Step Solution
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