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 2 (20 MARKS) Megah Berhad is a decentralized wholesaler with autonomous divisions. Each divisions is being monitored based on its return on investment (ROD), with investment defined as average operating assets employed. The rewards and bonuses are given to the divisional mangers based on ROI. The average overall ROI of the company for 2014 is 15 percent of operating investment. The operating results for Office Products Division for the year 2014 are given as below: Sales RM10,000,000 Variable expenses RM6,000,000 Contribution margin RM4,000,000 Fixed expenses RM3,200,000 Net operating income RM800,000 Divisional operating assets RM4,000,000 The Office Products Division has an opportunity to add a huge investment of RM1,000,000 in a new product line. The cost and revenue characteristics of the new investment per year would be: Sales RM2,000,000 Variable expenses 60% of sales Fixed expenses RM640,000 3 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 return on investment (ROD) for the Office Products Division for the year 2014. (2 marks) C. Assume that there is an expansion project on the new product line. i. Calculate the new ROI for the Office Products Division if the new product line is added. (4 marks) ii. Would the General Manager of Office Products Division be more likely to accept the new investment project if his performance was evaluated using ROI? Briefly explain the reason for his decision. (2 marks) iii. Why would the Managing Director of Megah Berhad be more likely to add and accept the new product line based on ROI? Briefly explain the reason for his decision. (2 marks)QUESTION 3 (20 MARKS) Gemilang Berhad is a decentralized wholesaler with four autonomous divisions that operate in similar markets, that are Division A, B, C and D. Each division is being monitored based on its Return on Investment (ROD), with investment defined as total net operating assets employed. The following investment opportunities are available to a Financial Controller: Division Initial Investment Annual Earnings A RM800,000 RM90,000 B RM100,000 RM20,000 C RM300,000 RM25,000 D RM400,000 RM60,000 Required: a. Elaborate on how the Financial Controller could improve the division's ROI. (3 marks) b. It is assumed that the cost of capital of Gemilang Berhad is 10 percent. Based on ROI, which project (s) should be chosen by the Financial Controller? (8 marks) C. If Gemilang Berhad is currently making a return on investment of 16 percent, which project (s) would the Financial Controller choose as the best investment? (2 marks) d. Based on the Residual Income (RI), advice Gemilang Berhad on which division should be chosen as the best investment. (7 marks)QUESTION l (20 MARKS) Cahaya Beer is one of the companies in Malaysia that implement decentralization. The company has No min divisions, that are Division A located in Selangor and Division B located in Perlis. Division A currently sells a condemer to manufacturers of cooling systems in local and overseas market for the price of RMSZU per tmit. The variable costs of the condenser amount to RMBBD. and demand for this product curreraly exceeds the division's ability to supply to the marketplace. Cahaya Beer is considering the condenser as one of its important component in enhancing the refrigeration system that would be produced by Division B. The expected selling price of the refrigeration system is RM1,285. the variable manufacturing costs is RMBZO and the expected transfer price of the condenser is RM490. The top management is anxious to introduce the new refrigeration system. However. it is not possible for Division B to nd other suppliers of the condensers in the quality and quantity desired. The company uses responsibility accounting and Return on Investment (ROI) in measuring divisional performance, and awards bonuses to divisional management. Required: 3. How would Division A's divisional manager likely react to the decision to transfer condensers to Division B? Show computations to support your answer. (3 marks) b. How would Division B's divisioml management likely react to the RM490 transfer price? Show computations to support your answer. (6 marks) c. Assime that a lower transfer price is desired. What parties should be involved in setting the new price? (3 marks) d. From a contribution margin perspective. advise the top management of Cahaya Beer on the transfer of condensers from Division A to Division B. Does the company benet more if Division A sells the condensers to external market. rather than transfers the condensers to Division B? Support your answer by showing relevant workings. {3 marks) B. The Alpha Division of the Beta Berhad manufactures product X at a variable cost of RM40 per unit. Alpha Division's fixed costs, which are sunk, are RM20 per unit. Product X is saleable in a competitive market where the market price of product X is RM70 per unit. On the other hand, Gamma Division of Beta Berhad uses product X to make product Y. The variable costs to convert X to Y are RM20 per unit and the fixed costs, which are sunk, are RM10 per unit. The product Y sells for RM80 per unit. Required: i. Both Alpha and Gamma divisions are to be treated as a profit center. What will be the best transfer price of product X that the divisional managers should choose in order to ensure that Beta Berhad's profit will be maximized? (3 marks) ii. Given that the price from part (a) above is chosen as the transfer price of Product X. What should the divisional manager of the Gamma Division do? (4 marks) iii. Suppose there is no market price for product X. What transfer price should be used for decentralized decision-making? (2 marks) iv . If it is assumed that there is no market for product X, will the operations of the Gamma Division be profitable