need project report on all

WE Particulars (Variable costs of Departement : Direct Materials Direct Labour Variable on Total VC in Department - 2 (d) Total Variable Cost per unit (b + c) (e) Contribution per unit (a -d) 120 12 7 375 165 Particulars (a) Maximum Possible Production in Dept-1 Pachaka's - Students' Handbook on Strategic Cut Management Performance Evaluation - CA Final EXE 121 290 (10 hrs 3.60) - 36 (75x160) 27 138 258 117 2. Computation of Quantity to be produced and profit using Internal facilities only WYE EXE (1,75.000 hrs + 5 hrs pu) (1,75,000 hrs +7.5 hrs pu) 23,333 units 35,000 units (2.80,000 hrse 7.5 hrs pu) 28,000 units = 37,333 units 23,333 units 35,000 units (35,000 unitsx 117 pu) (23,333 unitsx 165 pu) = 38,49,945 Decision: Internal Production of EXE gives the Maximum Contribution to the Company. The resultant Maximum Profit = 3 40,95,000 Contribution 40,95,000 - Fixed Prod OH 15,00,000 = 25,95,000. 3. Sub-Contracting Options available to the Company EXE = 38,500 units WYE = 31,500 units Dept Own Production Sub-Contract Dept Own Production Sub-Contract (maximum) (WN 2a) 1 38,500 - 35,000 = 23,333 = (maximum) (WN 2a) 35,000 units 3,500 units (bal.fig) 1 23,333 units 8,167 units (bal.fig) (b) Maximum Possible Production in Dept - 2 (2,80,000 hrs + 10 hrs Dus (c) Maximum Production using the available hours in both Departments - Least of (a) and (b) (d) Maximum Possible Contribution - (Quantity as per (C)x Contribution pu) 31,500 35,000 + 2,333 (6/6) 1,167 units 2 = 37,333 units (i.e.3,500-2,333) uts (maximum) (WN 2b) Effect of above decision: (a) Own Production (Dept 1 & 2) 35,000 units (b) Sub-Contracting Dept 1 only 2,333 units (C) Sub-Contracting Dept 1 & 2 1,167 units Total 38,500 units 23,333 + 4,667 (6/1) 3,500 units 2 = 28,000 units (i.e.8,167-4,667) uts (maximum) (WN 2b) Effect of above decision: (a) Own Production (Dept 1 & 2) 23,333 units (b) Sub-Contracting Dept 1 only 4,667 units (C) Sub-Contracting Dept 1 & 2 3,500 units Total 31,500 units 4. Profit Statement using Sub-Contracting Facilities as per above options Particulars EXE WYE (a) Selling Price per unit 375 540 (b) Own VC per unit in Department 1 (WN 1b) 120 193 (c) Own VC per unit in Department 2 (WN 1c) 138 3182 (d) Sub-Contract Cost per unit in Department 1 138 3212 (e) Sub-Contract Cost per unit in Department 2 150 192 (1) Contribution per unit in case of - Own Prodn in both Dept 1 & 2 (a-b-c) 117 165 Sub-Cont Dept 1 & Own Prodn Dept 2 (a-d-c) 99 314 Sub-Contract in both Dept 1 and 2 (a-d-e) 87 13 9) Total Contribution Earned Own Prodn in both Dept 1 & 2 (35,000 utsx 117)= 40,95,000 (23,333 utsx3165)= 38,49,94 Sub-Cont. Dept 1 & Own Prodn Dept 2 (2,333 uts x 99) = 2,30,967 (4,667 utsx 146) = 76,81,3 Sub-Contract in both Dept 1 and 2 (1,167 uts x 87)= 1,01,529 (3,500 uts x 136) = 4,76,0 tal of above Contribution 44,27,496 50,07,3 9.136 Company Profit the worst PE 1.1.000 1.32.000 1.60.000 1.60,000 000 78,000 16.000 mect the present Transfer Pricing Systems de tercers price estable, since it - (1) generates extra profit of 28,000 me busy to the inatiative of Retail Division in reducios its prices and increasing How we have receive for this tive, due to the following reasons profits are reduced by 2.000 (when Transfer Price 200 per box) and by 16,000 (when Transfer Price 10 per box). There is no incentive to Retail Division for increasing output beyond 60,000 packets. whole Divers profes are increased by $2,000 (when Transfer Price 200 per box) and by 44,000 (when TransferPro 150 per bowl. It constitutes unjust enrichment of Wholesale Division since it cannot selt more than 1,000 boxes to de customers, at the prevailing price. Due to the conflit arising out the defective Transfer Pricing policy, the Company's profits will be reduced by * 28,000. (This because Retail Division will restrict its output to 60,000 packets). 5. Resolving the conflict: (a) Transfer Price of 200 is defective since it does not reflect even the current market conditions, (b) Transfer Price of 180 is based on the Market Prices, and hence can be considered as the maximum that the recipient Division (Retail) will be ready to pay. (C) For economic decisions, the Managers can negotiate the Transfer Price subject to the following range Minimum TP (from Wholesale Group's viewpoint): Minimum Transfer Price = Relevant Costs - Variable costs (upto the point of transfer) + Fored Costs (if specific) + Opportunity Costs (if any). In the given case, only variable costs are relevant. Hence Minimum Transfer Price = 770 per box. Maximum TP (from Retail Group's viewpoint): Maximum Transfer Price = Market Price of the product or Market Price of its substitutes or the Recipient Division's ability to pay, whichever is less. In the given case, Maximum Transfer Price = Market Price = * 180 per box. (The Managers may agree on any price in the agreeable range from 70 to 180 per box. 5. Effect of Different Transfer Pricing Methods at Different Output Levels N 04 TYCON Ltd has two manufacturing departments organised into separate profit centers known as Textile Unit and Process House. The Textile Unit has a production capacity of 5 Lakh Metres cloth per month, but at present its sales is limited to 50% to outside market and 30% to Process House. The Transfer Price for the calendar year was agreed at 7 6 per metre. This price has been fixed in line with the external Wholesale Trade Price on 1 January. However the price of yarn declined, which was the raw material of the Textile Unit. As an effect, the Wholesale Trade Price reduced to ? 5.60 per metre with effect from 1st June. This price is however not made applicable to the sales made to the Processing House of the Company. The Textile Unit turned down the Processing House request for revision of price. The Process House refines the cloth and packs the output known as brand Rayon in bundles of 100 metres each. The selling price of Rayon is ? 825 per bundle. The Process House has a potential of selling a further quantity of 1,000 bundles of Rayon provided the overall prices is reduced is