Performance measure Strategic performance X BD Transfer pricing.pdf DE Target costing (1).pdf x POE AAM3782_Test_2_4_Se X aam3752_2011_11_for X + . - @ 1 x a File | C:/Users/Loura%20lmbondi/Downloads/aam3752_2011_11_fop.pdf o 3 of 5 Q + {D Page view A Read aloud T Add text V Draw Highlight Erase G a A 19 Question 2: (25 marks) You are divisional controller of the RSA division of Thompson Electronics. Your division is operating at full capacity. The Zambian division has asked the RSA division to supply a sound system (chip and speaker), which it will use in a new model of a Game Box that it is introducing. The RSA division currently sells identical sound systems to outside customers at N$33.00 each. While the relevant variable cost of sound system is N$ 26. The Zambian division has offered to pay N$21.00 for each sound system. The total cost of the Game Box is as follows; Purchased parts form outside vendors Sound system from RSA division Other variable costs Fixed overheard N$ 84.00 N$ 21.00 N$ 51.50 N$ 30.00 The Zambian division is operating at 50% of capacity and this Game Box is an important new product introduction to increase its use of capacity. Based on a target costing approach, the Zambian division management has decided that paying more than N$21.00 for the sound system would make the production of the game box infeasible because the predicted selling price of the game box is only N$187.00. Thompson Electronics evaluates divisional managers on the basis of pre-tax ROI and dollar profits compared to the budget. Required: a) As divisional controller of the RSA division would you recommend supplying the sound system to the Zambian division for N$21.00 each? Why or why not? (4 marks) b) Would it be to the short run economic advantage of Thompson Electronics for the RSA division to supply the sound system to the Zambian division? Explain your answer? (8 marks) 27C Sunny ^ J - ENG 12:16 PM 31/10/2021 Performance measure Strategic performance X BD Transfer pricing.pdf DE Target costing (1).pdf x POE AAM3782_Test_2_4_Se X aam3752_2011_11_for X + . - @ 1 x a File | C:/Users/Loura%20lmbondi/Downloads/aam3752_2011_11_fop.pdf o 3 of 5 Q + {D Page view A Read aloud T Add text V Draw Highlight Erase G a A 19 Question 2: (25 marks) You are divisional controller of the RSA division of Thompson Electronics. Your division is operating at full capacity. The Zambian division has asked the RSA division to supply a sound system (chip and speaker), which it will use in a new model of a Game Box that it is introducing. The RSA division currently sells identical sound systems to outside customers at N$33.00 each. While the relevant variable cost of sound system is N$ 26. The Zambian division has offered to pay N$21.00 for each sound system. The total cost of the Game Box is as follows; Purchased parts form outside vendors Sound system from RSA division Other variable costs Fixed overheard N$ 84.00 N$ 21.00 N$ 51.50 N$ 30.00 The Zambian division is operating at 50% of capacity and this Game Box is an important new product introduction to increase its use of capacity. Based on a target costing approach, the Zambian division management has decided that paying more than N$21.00 for the sound system would make the production of the game box infeasible because the predicted selling price of the game box is only N$187.00. Thompson Electronics evaluates divisional managers on the basis of pre-tax ROI and dollar profits compared to the budget. Required: a) As divisional controller of the RSA division would you recommend supplying the sound system to the Zambian division for N$21.00 each? Why or why not? (4 marks) b) Would it be to the short run economic advantage of Thompson Electronics for the RSA division to supply the sound system to the Zambian division? Explain your answer? (8 marks) 27C Sunny ^ J - ENG 12:16 PM 31/10/2021