COURSE / KURSUS	:	MANAGEMENT ACCOUNTING II
CODE / KOD	:	BBMA3203

QUESTION. 1. Teh Teratai Sdn. Bhd. involved in making and distributing its herbal tea product, Hebat in Bandar Tengah. Its annual fixed cost is RM162,000, where RM130,000 is for the administration and distribution effort involved in selling the products. The sales manager is targeting a total of 35,000 boxes would be sold per year. The variable cost for processing is RM2 per box and its variables sales expense is 30 percent of the selling price. There will be no administrative cost incurred. The management is targeting a profit of RM160,000 for the currentyear.

(A) Based on the above information, determine the selling price of one box of Hebat. (8 MARKS) (B)There are several reasons for cost-based approach of a product to become popular and important in pricing decision. Discuss these reasons. (12 MARKS) 2. Bunga Raya Department of Wangi Industries produces a product called BB that is already made available in the external market. The management of Bunga Ros Department has decided to launch a new product which requires BB and has approached Bunga Raya Department for quotation. Bunga Raya Department sells BB at the price of RM53 and incurs a variable cost of RM9. At the moment, the Bunga Raya Department has excess capacity. The Bunga Ros Department can obtain other suitable BB in the external market for the price RM47.

(A) Explain the meaning of minimum transfer price. Determine the minimum price per unit of BB acceptable to Bunga Raya Department. (6 MARKS) (B) Explain the meaning of maximum transfer price. Determine the maximum price per unit of BB acceptable to Bunga Ros Department. (6 MARKS)

(C) Discuss the reasons why cost-based transfer price is not suitable for the use of benchmarking for a division in a company. (6 MARKS)