1. If the engineering division decides to charge its transfer to assembly division at cost plus 150%, what would be ABCW's overall profits and profits of its two divisions?
2. ABCW ltd a leading manufacturer of certain consumer durables product. The company has two divisions' engineering and assembly. The output of engineering division are transferred to assembly division for further processing and assembling before they are sold to the customers as complete products.

Verification of the company records reveals that the variable cost per unit of the product for engineering and assembly are Shs 250 and Shs 300 respectively. The fixed cost of engineering division is Shs 15,000 and that of assembly division is Shs 10,000.

 

The product variable cost per unit of engineering division is Shs 400 and total output is 100 units which are sold to the customers on completion at She 2,000 per unit.

 

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Answer rating: 100% (QA)

To calculate the overall profits and profits of the two divisions engineering and assembly under the scenario where the engineering division charges i... View the full answer