(a) From the following data, prepare a Production Budget for ABC Co. Ltd., for the six...

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(a) From the following data, prepare a Production Budget for ABC Co. Ltd., for the six months period ending on 30th June, 2017. Stocks for the budgeted period: Product A B C Other relevant data: Product A B As on 01 January, 2017 6,000 9,000 12,000 Normal loss in production 4% 2% 5% As on 30 June, 2017 10,000 8,000 17,500 (in units) Requirement to fulfill sales programme (units) 60,000 50,000 80,000 (b) XYZ Ltd., which has a system of assessment of Divisional Performance on the basis of residual income, has two Divisions, Alfa and Beta. Alfa has annual capacity to manufacture 15,00,000 units of a special component that it sells to outside customers but has idle capacity. The budgeted residual income of Beta is 1,20,00,000 and that of Alfa is 1,00,00,000. Other relevant details extracted from the budget for the current year are as follows: Particulars of Alfa: 12,00,000 units @ 180 per unit 160 *80,00,000 7,50,00,000 Sale (Outside customers) Variable cost per unit Divisional fixed cost Capital employed Cost of Capital 12% Beta has received a special order for which it requires components similar to the ones made by Alfa. Fully aware of the idle capacity of Alfa, Beta has asked Alfa to quote for manufacture and supply of 3,00,000 units of the components with a slight modification during final processing. Alfa and Beta agreed that this will involve an extra variable cost to Alfa amounting to 5 per unit. Calculate the transfer price, which Alfa should quote to Beta to achieve its budgeted residual income. [6+6 Marks] (a) From the following data, prepare a Production Budget for ABC Co. Ltd., for the six months period ending on 30th June, 2017. Stocks for the budgeted period: Product A B C Other relevant data: Product A B As on 01 January, 2017 6,000 9,000 12,000 Normal loss in production 4% 2% 5% As on 30 June, 2017 10,000 8,000 17,500 (in units) Requirement to fulfill sales programme (units) 60,000 50,000 80,000 (b) XYZ Ltd., which has a system of assessment of Divisional Performance on the basis of residual income, has two Divisions, Alfa and Beta. Alfa has annual capacity to manufacture 15,00,000 units of a special component that it sells to outside customers but has idle capacity. The budgeted residual income of Beta is 1,20,00,000 and that of Alfa is 1,00,00,000. Other relevant details extracted from the budget for the current year are as follows: Particulars of Alfa: 12,00,000 units @ 180 per unit 160 *80,00,000 7,50,00,000 Sale (Outside customers) Variable cost per unit Divisional fixed cost Capital employed Cost of Capital 12% Beta has received a special order for which it requires components similar to the ones made by Alfa. Fully aware of the idle capacity of Alfa, Beta has asked Alfa to quote for manufacture and supply of 3,00,000 units of the components with a slight modification during final processing. Alfa and Beta agreed that this will involve an extra variable cost to Alfa amounting to 5 per unit. Calculate the transfer price, which Alfa should quote to Beta to achieve its budgeted residual income. [6+6 Marks]

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