Required: Explain and calculate the transfer prices at which Makeba Division should offer to transfer the...

Transcribed Image Text:

Required: Explain and calculate the transfer prices at which Makeba Division should offer to transfer the part to the Division in order that the group profit maximizing decisions may be taken on financial grounds in each of t independent situations: (a) The Makeba Division has no spare capacity and the Kubang Division wants to purchase 18,000 units. marks) (b) Makeba Division has excess capacity to supply all parts needed by the Kubang Division. marks) (c) Makeba Division has excess capacity for only 9,000 of the total 15,000 parts needed by the Kubang Div However, the Kubang Division has an alternative use of this excess capacity which provides to a contributic each part. (4 marks) (d) Discuss briefly two (2) benefits to management of establishing responsibility centres. marks) Required: Explain and calculate the transfer prices at which Makeba Division should offer to transfer the part to the Division in order that the group profit maximizing decisions may be taken on financial grounds in each of t independent situations: (a) The Makeba Division has no spare capacity and the Kubang Division wants to purchase 18,000 units. marks) (b) Makeba Division has excess capacity to supply all parts needed by the Kubang Division. marks) (c) Makeba Division has excess capacity for only 9,000 of the total 15,000 parts needed by the Kubang Div However, the Kubang Division has an alternative use of this excess capacity which provides to a contributic each part. (4 marks) (d) Discuss briefly two (2) benefits to management of establishing responsibility centres. marks)

Answer rating: 100% (QA)

a Transfer price 960 per unit When there is no spare capacity the golden rule for minimum transfer p... View the full answer