I need the answers to question number 4 and 5 and 6. i really need it as soon as possible :-(

Exercise 1 (15 points) a) Describe the differences between an insulating and a noninsulating cost allocation scheme. Give examples. b) What are the advantages and disadvantages of a noninsulating cost allocation scheme? c) What are the advantages and disadvantages of an insulating cost allocation scheme? Exercise 2 (5 points) Give three reasons for allocation of service department costs. Exercise 3 (10 points) a) When does the death spiral occur? b) Give two possible solutions to counter the death spiral. Exercise 4 (20 points) 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): Quantity 1 2 3 4 Price ($000) $1,000 950 900 850 Quantity 5 6 7 8 Price ($000) $800 750 700 650 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 many turbines will the Generator Division purchase? 1 d. Should Siemens use a variable-cost transfer price or a full-cost transfer price to transfer turbines between the Turbine and Generator divisions? Why? Exercise 5 (20 points) 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) Revenue Earnings before corporate overhead allocations Consulting Services 250 80 Chemicals 250 50 Agricultural Products 500 70 Total 1,000 200 Required: a. Calculate divisional earnings after corporate overhead allocations using divisional revenues as the allocation base. b. Calculate divisional earnings after corporate overhead allocations using divisional earnings before corporate overhead allocations as the allocation base. c. Given that overhead will be allocated to the division, should revenue or earnings be the allocation base? Why? d. After reviewing the data form parts (a) and (b), all three divisional managers were critical of the decision to allocate corporate overhead, but the manager of agricultural products was particularly outspoken. She said, \"This is just another hair-brained scheme of the [expletive deleted]. They have nothing better to do with their time than to push numbers around. We in the divisions have 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. 2 Exercise 6 (20 points) 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 cream-filled donut. You must step in and complete his step-down allocations. The three service departments (A, B, and C) have costs (before any cost allocation) of: Service Department A B C Service Department's Own Cost $600,000 300,000 200,000 The following table provides the percentage of utilization of each service department by the other service departments and the operating departments: Service Departments A B C 5% 10% 20% 8 0 15 15 5 7 A B C Operating Departments D1 D2 D3 30% 15% 20% 22 20 35 20 30 23 100% 100 100 The step-down sequence is A, B then C. Poor Jack allocated only A's costs before the donut did him in. His incomplete spreadsheet is: Service Department Cost $600,000 Service Departments Operating Departments A B C D1 D2 D3 A $0 $63,158 $126,316 $189,474 $94,737 $126,316 B C Required: a. Do Jack proud and complete the incomplete spreadsheet. Like Jack, round all cost allocations to the nearest dollar. b. If the company wants the cost allocations to most accurately capture the opportunity cost of resources consumed by the operating divisions, how should the service departments be ordered in the step-down method? Justify your answer with calculations. 3