solve all question .

reference ; https://studylib.net/doc/5560557/management-control-in-decentralized-organizations

https://kidsinprisonprogram.files.wordpress.com/2015/12/mgmt-027-chapter-11-slides.pdf

https://www.google.com/amp/s/slideplayer.com/amp/5849228/

https://www.slideshare.net/juditjnugroho/acc-mgt-noreen10-decentralization

QUESTION 3 (20 MARKS) Berjaya Berhad is a decentralized wholesaler with two autonomous divisions that operate in similar markets that are the Properties and Food Services division. Each division has a required rate of return of 15% and is being monitored based on its return on investment (ROI), with investment defined as total net operating assets employed. The planned operating results for the year 2016 are as follows: Division Invested Capital Operating income Properties RM6,000,000 RM900,000 Food Services RM1,000,000 RM200,000 Required: a. Elaborate on how the manager of Properties division could improve its division's ROI. (3 marks) b. Based on the ROI and residual income (RI), advice Berjaya Berhad on which division that shows a better performance for the year 2016. (10 marks) C. The company is planning to have an expansion in the year 2017, which will require each division to increase its investments by RM2,500,000, resulting an increase of its income by RM450,000. Advise Berjaya Berhad on which division that shows a better performance for the year 2017 by looking at the new ROI and RI. (7 marks)QUESTION 4 (20 MARKS) Maju Bersatu Berhad is a decentralized wholesaler with two autonomous divisions that operate in similar markets, that are Division A and Division B. Each divisions is being monitored based on its return on investment (ROI), with investment defined as total net operating assets employed. The rewards and bonuses are given to the divisional mangers based on ROI. At the end of the month, both divisions are required to prepare the operating statement to be submitted to Maju Bersatu. The operating statements for these two divisions for the month of December 2015 are as shown below: Operating Statements for December 2015 Division A Division B Sales RM900,000 RM555,000 Variable expenses RM345,000 RM312,000 Contribution margin RM555,000 RM243,000 Less: Controllable fixed expenses (including depreciation on assets) RM95,000 RM42,000 Operating income RM460,000 RM201,000 Less : apportioned Central costs RM338,000 RM180,000 Net income before tax RM122,000 RM21,000 Total Divisional Net assets RM9,760,000 RM1,260,000 The target return on capital for Maju Bersatu Berhad for 2015 is 12 percent per annum. However, the company believe that its cost of capital is likely to rise and is considering an increasing target return on capital in the next future years. Required: a. Calculate the annualized return on investment (ROI) for both Division A and Division B for the year 2015. (4 marks) b. Evaluate the relative performance of both Division A and Division B for the year 2015 using the ROI and other relevant information given above. (5 marks) C. Suppose that the minimum required rate of return on operating assets of Maju Bersatu Berhad is 12% and the performance is now evaluated based on Residual Income (RI). i Calculate the annualized RI for both Division A and Division B for the year 2015. (4 marks) Evaluate the relative performance of both Division A and Division B for the year 2015 using the RI and other relevant information given above. (3 marks) d. Briefly discuss the strengths and weaknesses of ROI and RI as methods of assessing the performance of divisions. (4 marks)QUESTION 1 (20 MARKS) Gempak Division manufactures electronic component that can be sold either to Division BP of the same company or to outside customers. During the year 2016. 20.000 units of electronic component were produced. which 16,000 units were sold to outside customers and another 4.000 units were transferred and sold to Division BP. The electronic component was used in an electric instrument manufactured by Division BP. where one instrument requires one electronic component. The electronic component of this type is not available from any other sources. Both the selling price and the transfer price per electronic component is RMIZS and its variable cost per electronic component is RMQD. Division BP incurred additional RM100 variable cost per instrument and then sold the instruments for the price of RM300 each. Required: a. Briefly explain the meaning of the term decentralization. (3 marks) b. Briey explain the FIVE (5) benets from implementing the decentralization system. (5 marks) (3. Prepare the income statements for Gempak Division. Division B? and the company as a whole. (7marks) d. Assumed that the full capacity of Gempak Division is 20.000 electronic component per annum. In the next year 201?. Division BP wants to increase its order to 5.000 units of electronic component. Evaluate the decision of Gempak Division to sell the extra 1.000 units electronic component to Division BP from the standpoint of the company as a whole. {5 marks) QUESTION 2 (20 MARKS) Berjaya Berhad is a decentralized wholesaler with two autonomous divisions that operate in similar markets that are the Properties and Food Services division. Each division has a required rate of return of 15% and is being monitored based on its return on investment (ROI), with investment defined as total net operating assets employed. The planned operating results for the year 2019 are as follows: Division Invested Capital Operating income Properties RM6,000,000 RM900,000 Food Services RM1,000,000 RM200,000 Required: a. Elaborate on how the manager of Properties division could improve its division's ROI. (3 marks) b. Based on the ROI and residual income (RI), advice Berjaya Berhad on which division that shows a better performance for the year 2019. (10 marks) c. The company is planning to have an expansion in the year 2020, which will require each division to increase its investments by RM2,500,000, resulting an increase of its income by RM450,000. Advise Berjaya Berhad on which division that shows a better performance for the year 2020 by looking at the new ROI and RI. (7 marks)QUESTION 3 (20 MARKS) Cahaya Berhad is a subsidiary of Simex Berhad. Cahaya Berhad is being monitored based on its return on investment (ROD), with investment defined as average operating assets employed. The rewards and bonuses of the management are determined based on ROI. The average cost of capital is 8 percent of operating investment. Cahaya Berhad has made a huge investment of RM2,000,000 in Project AA. This Project AA has reported an income of RM200,000 for the year 2014. The company is planning to have an expansion on Project AA, which will require the company to increase its investments in the near future. Required: a. Briefly explain the meaning of financial control. Explain how does financial control relates to nonfinancial measures of performance. (3 marks) b. Compute the current return on investment (ROD) for Cahaya Berhad. (2 marks) c. Compute the current economic value added (EVA) for Cahaya Berhad. (3 marks) d. Assume that there is an expansion project that requires a RM200,000 investment for a return of RM18,000. i. Calculate the new ROI for Cahaya Berhad. (3 marks) ii. Calculate the new EVA for Cahaya Berhad. (4 marks) iii. Would the General Manager be more likely to accept the new investment project if his performance was evaluated using ROI or EVA? Briefly explain the reason for his decision? (5 marks)QUESTION 2 [an MARKS] Utara Division manufactures electronic speaker that can be sold either to South Division of the same company or to outside customers. The electronic speaker was wed in an electronic toys manufactured by South Division. where one toy requires one electronic speaker. The electronic speaker of this type is not available From any other sources. During the year 2014. 20,000 units of electronic speaker were produced, which 10.000 units were sold to outside customers and another 4,000 units were transferred and sold to South Division. Both the selling price and the transfer price for the electronic speaker is RMIZS and its variable cost per speaker is RMQD. South Division incurred additional RM100 variable cost per speaker and then sold the electronic toys for the price of RM300 each. Required: :1. Briey explain the FIVE {5] motivation for decentralization. {5 marks) h. Briey explain the meaning of transfer price. (3 marks) c. Prepare the income statements for Utara Division. South Division and the company as a whole. {8 marks) :1. Assumed that the full capacity of Utata Division is 20.000 electronic speakers per annum. In the next year 2015. South Division wants to increase its order to 5.000 units of electronic speaker. Would you recommend that Utara Division to sell the extra 1,000 units electronic speaker to South Division? Explain your reasons for your reconunendation from the standpoint of the company as a whole. {1 mar-Pei