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I need answers to the following questions as soon as possible please :-) I attached a .doc with the questions. Exercise 4 Siemens's Turbine Division
I need answers to the following questions as soon as possible please :-) I attached a .doc with the questions.
Exercise 4 Siemens's Turbine Division manufactures gas powered turbines for generating electric power and hot water for heating systems. Turbine's variable cost per unit is $ 150,000 and its fixed cost is $ 1.8 million per month. It has excess capacity. Siemens's Generator Division buys gas turbines from Siemens's Turbine Division and incorporates them into electric steam generating units. Both divisional managers are evaluated and rewarded as profit centers. The Generator Division has variable cost of $200,000 per completed unit, excluding the cost of the turbine, and fixed cost of $1.4 million per month. The Generator Division faces the following monthly demand schedule for its complete generating unit (turbine and generator): Required: a. If the transfer price of turbines is set at Turbine's variable cost ($150,000), how many turbines will the Generator Division purchase to maximize its profits? b. The Turbine Division expects to sell a total of 20 turbines a month, which includes both external and internal sales. Calculate the (average) full cost of a turbine (fixed cost plus variable cost) at this level of sales. c. If the transfer price of turbines is set at Turbine's (average) full cost calculated in (b), how Quantity many turbines will the Generator Division purchase? Price ($000) Quantity rice or a full d. Should Siemens use a variablecost transferPprice($000) cost transfer price to transfer turbines 1 between the Turbine and Generator divisions? Why? $1,000 5 $800 2 950 6 750 3 900 7 700 4 850 8 650 Exercise 5 Nutrivet Farms in Cairo, Egypt, has a corporate headquarters staff and three operating divisions: consulting services, chemicals, and agricultural products. Giza is considering allocating 160 million Egyptian pounds of corporate overhead (which includes salaries and benefits of corporate headquarters staff, advertising, human resources, legal, and so forth) to the three divisions using either divisional revenues or divisional earnings before corporate overhead allocations as the allocation base. (One Egyptian pound is worth about $0.30.) The following table describes the revenues and earnings before corporate overhead allocations for each of the three operating divisions. Nutrivet Farms Divisional Revenues and Earnings before Corporate Overhead Allocations (Millions of Egyptian pounds) Consulting Services Chem icals Required: A gricultural Products a. Calculate divisional earnings after corporate overhead allocations using divisional revenues as Total the allocation base. Revenue 250 b. Calculate divisional earnings after corporate overhead allocations using divisional earnings 250 before corporate overhead allocations as the allocation base. 500 c. Given that overhead will be allocated to the division, should revenue or earnings be the 1,000 allocation base? Why? Earnings (a) and (b), all three divisional managers were critical of the d. After reviewing the data form partsbefore corporate overhead allocations 8 overhead, but the manager of agricultural products was particularly decision to allocate corporate0 5 just outspoken. She said, \"This is 0 another hair brained scheme of the [expletive deleted]. They 70 have nothing better to do with their time than to push numbers around. We in the divisions have 200 no control over corporate spending and all these allocations do is create dissension among the divisional managers and distort the true relative profitability of the divisions.'' Respond to the agricultural products manager's remarks. Exercise 6 Jack Wilder was preparing the monthly report that allocates the three service department's (A, B and C) costs to the three operating divisions (D1, D2 and D3) when he choked to death on a stale double creamfilled donut. You must ervice Departm S step in and complete his step down allocations. The three ent service departments (A, B, and C) have costs (before any Ownallocation) of: Service Departm ent's cost Cost A $600,000 B The following table provides the percentage of utilization of each service department by the other 300,000 service departments and the operating departments: C Service Departments A B C 200,000 Operating Departm ents D1 D2 D3 The stepdown sequence is A, B then C. Poor Jack allocated only A's costs before the donut did A him in. His incomplete spreadsheet is: 5% 10% 20% 30% 15% 20% 100% Required: B a. Do Jack proud and complete the incomplete spreadsheet. Like Jack, round all cost allocations to 8 0 15 the nearest dollar. 22 20 35 Service Departm Cost ent b. If the company wants the cost allocations to most accurately capture the opportunity cost of 100 resources consumed by the operating divisions, how should the service departments be ordered in C Service Departm ents A B C the stepdown method? Justify your 5 5 7 with calculations. 1 answer Operating Departments D1 D2 D3 20 30 23 $600,000 100 A $0 $63,158 $126,316 $189,474 $94,737 $126,316 B CStep by Step Solution
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