Question 1

Global Tech Solutions is a software development company that specializes in creating mobile applications for various industries. The company has been in operation for 15 years and has established a strong reputation in the market. However, with the emergence of new competitors and advancements in technology, Global Tech Solutions is facing challenges in maintaining its competitive edge.

To address these challenges, the management of Global Tech Solutions decides to adopt new strategic management accounting techniques, target costing. They form cross-functional teams comprising software developers, designers, testers, and project managers to enhance collaboration and efficiency in the development process.

The teams conduct a thorough analysis of their software development lifecycle and identify areas of improvement. They realize that the traditional waterfall approach they have been following is causing delays and hindering innovation. By embracing the new technique, they aim to streamline the development process and deliver high quality products more efficiently.

Requried:

1. Outline five advantages that Global Tech Solutions can gain from adopting target costing.
2. Discuss four possible challenges that Global Tech Solutions may face during the implementation of target costing and propose appropriate solutions to address these issues.

Question2

Ace Sdn. Bhd. consists of two manufacturing divisions: Division X and Division Y. Division X specializes in producing buttons, which are then sold in the external market. Meanwhile, Division Y focuses on manufacturing teddy bears for the local market. To produce teddy bears, Division Y requires buttons, which they currently purchase from an external supplier at a cost of RM2.50 per unit. Recognizing that Division X produces the same buttons, the manager of Division Y intends to explore the possibility of procuring buttons directly from Division X. It is worth noting that Division Y sells the teddy bears for RM15 each.

The estimated sales and standard cost of Division X for the year ending 31 December 2022, based on the capacity of 100,000 units are as follows:

	RM
Sales	1,000,000
Variable Costs	400,000
Fixed Costs	300,000

Required:

1. Calculate the acceptable range of transfer prices, if Division Y request of 20,000 units of buttons from Division X, considering that Division X has no available capacity.
2. Division X sells only 80% of its buttons to external customers and Division Y requests 30,000 units of buttons. With internal transaction, Division X could avoid RM0.50 per unit in selling commission. Provide advice to Division X regarding the internal transaction.
3. Division Y requests 50,000 units of buttons from Division X, and Division X has sufficient capacity to fulfill the request. If the transaction takes place, the variable cost of electric motors would decrease by 15% compared to selling to external customers. Determine the acceptable price at which Division X agrees to sell internally.
4. Explain three issues associated with transfer pricing.

Question 3

TechPro Solutions Ltd. is a medium-sized company that specializes in manufacturing computer processors and graphic cards. The company has been in operation for seven years and has enjoyed steady growth in the market. However, recently, the management of TechPro Solutions noticed a decline in the production and sales of their computer processors and graphic cards, causing growing concern.

In response to this issue, the management of TechPro Solutions decided to conduct a comprehensive market analysis. The results revealed that their competitors were offering similar products at lower prices, which was primarily attributed to their ability to produce the items at a lower cost. These findings prompted the management to recognize the need for improvements in their own manufacturing processes.

To address this challenge, the management of TechPro Solutions called a meeting with all the department managers to discuss potential actions for enhancing their manufacturing process. After several productive discussion sessions, they concluded that implementing a benchmarking program would be instrumental in identifying areas where they could improve their operations.

Required:

1. How should Hublot Sdn. Bhd. conduct the benchmarking process to achieve their desired outcomes?
2. What are three potential challenges that Hublot Sdn. Bhd. may encounter when implementing a benchmarking program?
3. Outline three benefits of using non-financial performance measurement systems.