The companies Plastymere and Agrobio belong to the same Group.

• Plastymere manufactures plastic films for food
• Agrobio prepares and sells packaged food (vegetable and salad in plastic bags)

Plastymere sells a part of its plastic film production (product P) to Agrobio which transforms rolls into packets of freezer bags. With 300 tons of plastic film P, Agrobio gets 300 tons of bags. Those 300 tons are already booked to Plastymere for the next year.

The transfer price between Plastymere and Agrobio is thestandard cost of P.

Agrobio sells its bags on the European market.

Forecasts for the next year :

• Plastymere:
• Selling price of plastic film P on the external market: 7 287 / ton
• Standard manufacturing cost of P: 6 097 / ton
• Variable : 1 524 /ton
• Fixed : 4 573 /ton
• Sales quantities forecasts (including the 300 tons for Agrobio): 2 300 tons
• Production capacity still available : 3 tons.
• Agrobio :
• Selling price of plastic bag on the European market: 7 775 / ton
• Transformation costs :
• Variable : 152 /ton
• Fixed : 457 /ton
• Total production capacity: 350 tons
• Fixed costs have been fully allocated to sales forecasts.

QUESTIONS

1. What is the forecasted profit ?
2. Of Plastymere, on product P sales ?
3. Of Agrobio, on plastic bags sales ?
4. What is the forecasted profit of the Group ? Is it reflecting the Group's performance?
5. Agrobio received a new order from South East Asia for 40 tons of bags at a selling price estimated 6 860 per ton. This new order wouldn't require any additional structural cost .
6. Should Agrobio's Managers accept this new order?
7. The Group's Managers have been informed about this opportunity; Will they support Agrobio's decision ?

Answer rating: 100% (QA)

To calculate the forecasted profit we need to consider the revenue variable costs and fixed costs fo... View the full answer