TASK

You have decided to go into partnership with one or more other ACC5MCR students. Your partnership entity will consist of two or three business divisions depending on the number of students in the team. Theses divisions produce the products used in your individual assignments. The team will be responsible for the management of all divisions and the management accounting therein. Based on the standard costs and prices you determined in your individual assignments, you are required to prepare flexible budgets, undertake variance analyses, perform cost-volume profit (CVP) analysis, and consider transfer pricing options.

INSTRUCTIONS/REQUIREMENTS

Assume that the actual results for your products from your individual assignments were as follows:

1. The units produced and sold were 10% less than budgeted.
2. The quantity of direct materials, labour hours and overhead activites used for units produced were 3% more than budgeted.
3. The standard price/cost of direct materials, labour and overheads were 5% more than budgeted.
4. Selling price of your product was 15% more than budgeted.

Please complete the requirement below in an Excel file (the one Excel file is to include the submission of all group members):

calculate

1. A static profit and loss statement budget at budgeted sales level.
2. A flexible profit and loss statement budget using actual sales level.
3. Actual profit and loss statement.
4. Calculate the significance level and classify as either favourable or unfavourable and select two of the highest significance levels to perform variance analysis (one variance analysis for each group members' products), and critically explain the reasons for these variances and how and by whom within the organisation they should be managed by.
5. Provide a brief performance evaluation of each business division in relation to their relative profit/loss and variances.

1. Establish the sales mix for your group's combined products and form a package contribution margin to:
   1. Calculate the break-even point in units.
   2. Calculate the break-even point in sales dollars based on both of your products/services (apply multiple products CVP analysis).
   3. Prepare a contribution margin income statement to verify your break-event sales dollars amount.

1. Consider the possibility of supplying whole or part of your product offering from one business division to the other to determine the most appropriate transfer price for each of the scenarios below:
2. The supplying subsidiary has the capacity to supply the product required by the taker.
3. The supplying subsidiary does not have capacity to supply the product to the taker.
4. The supplying subsidiary only has capacity to supply 80% of the taker's volume requirement.

For each scenario above, you need to clearly state and explain the transfer pricing assumptions and methods used.