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    Udah Bener'

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    Shafa Azahra
    This document contains information about two assessment cases for a Bachelor of Accounting degree. Case 1 examines whether a company should accept an outside supplier's offer to purchase a part for $21 per unit that they currently manufacture internally for $25 per unit. Making the part internally costs $600,000 while purchasing costs $420,000, so profits would increase by $180,000 if the offer is accepted. Case 2 provides sales and cost data for a body lotion product and asks to calculate the acceptable transfer price range if the lotion is transferred between divisions of the company. It also determines whether profit is possible if the lotion is transferred at cost.

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    Udah Bener'

    Uploaded by

    Shafa Azahra
    753 views4 pages
    This document contains information about two assessment cases for a Bachelor of Accounting degree. Case 1 examines whether a company should accept an outside supplier's offer to purchase a part for $21 per unit that they currently manufacture internally for $25 per unit. Making the part internally costs $600,000 while purchasing costs $420,000, so profits would increase by $180,000 if the offer is accepted. Case 2 provides sales and cost data for a body lotion product and asks to calculate the acceptable transfer price range if the lotion is transferred between divisions of the company. It also determines whether profit is possible if the lotion is transferred at cost.

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    Akuntansi Management

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    udah bener'

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    This document contains information about two assessment cases for a Bachelor of Accounting degree. Case 1 examines whether a company should accept an outside supplier's offer to purchase a part for $21 per unit that they currently manufacture internally for $25 per unit. Making the part internally costs $600,000 while purchasing costs $420,000, so profits would increase by $180,000 if the offer is accepted. Case 2 provides sales and cost data for a body lotion product and asks to calculate the acceptable transfer price range if the lotion is transferred between divisions of the company. It also determines whether profit is possible if the lotion is transferred at cost.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    753 views4 pages

    Udah Bener'

    Uploaded by

    Shafa Azahra
    This document contains information about two assessment cases for a Bachelor of Accounting degree. Case 1 examines whether a company should accept an outside supplier's offer to purchase a part for $21 per unit that they currently manufacture internally for $25 per unit. Making the part internally costs $600,000 while purchasing costs $420,000, so profits would increase by $180,000 if the offer is accepted. Case 2 provides sales and cost data for a body lotion product and asks to calculate the acceptable transfer price range if the lotion is transferred between divisions of the company. It also determines whether profit is possible if the lotion is transferred at cost.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    BACHELOR OF ACCOUNTING

    FACULTY OF ECONOMICS AND COMMUNICATION


    BINA NUSANTARA UNIVERSITY
    JAKARTA

    ASSESSMENT METHOD

    Shafa Azahra (2201833934)

    Case Study:

    Case 1 (70%)
    Hairdo Products manufactures 30,000 units of part K-7 each year for use on its production line.
    At The level of activity, the cost per unit for part K-7 is:

    Direct materials . . . . . . . . . . . . . . . . . . . . . $ 4
    Direct labor . . . . . . . . . . . . . . . . . . . . . . . . $12
    Variable manufacturing overhead . . . . . . . $5
    Fixed manufacturing overhead . . . . . . . . . $12
    Total cost per part . . . . . . . . . . . . . . . . . . . $25

    An outside supplier has offered to sell 20,000 units of part K-7 each year to Hairdo Products for
    $21 per part. If Hairdo Products accepts this offer, the facilities now being used to manufacture
    part K-7 could be rented to another company at an annual rental of $100,000. However, Hairdo
    Products has determined that two-thirds of the fixed manufacturing overhead being applied to
    part K-7 would continue even if part K-7 were purchased from the outside supplier.
    Required:
    Prepare computations showing how much profits will increase or decrease if the outside
    supplier’s offer is accepted.
    BACHELOR OF ACCOUNTING
    FACULTY OF ECONOMICS AND COMMUNICATION
    BINA NUSANTARA UNIVERSITY
    JAKARTA

    Answer :
    Per Unit 20.000 Units
    Make Buy Make Buy
    Cost of Purchasing $ 21 $ 420.000
    Direct Material 4 $ 80.000
    Direct Labor 12 240.000
    Variable Manufacturing 5 100.000
    Overhead
    Fixed Manufacturing 4 80.000
    Overhead
    Rent 100.000
    Total $ 25 $ 21 $ 600.000 $ 420.000

    Profit will increase by $180.000 if the outside supplier’s offer is accepted.

    Case 2 (30%)
    Kaila Company’s Body Lotion Division produces a body lotion that is used by manufacturers of
    various body butter products. Sales and cost data on the body lotion follow:

    Selling price per unit on the intermediate market . . . . . . . . .$70


    Variable costs per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45
    Fixed costs per unit (based on capacity) . . . . . . . . . . . . . . . $10
    Capacity in units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000

    Number of body lotion:


    Produced during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
    Sold to outside customers . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000
    BACHELOR OF ACCOUNTING
    FACULTY OF ECONOMICS AND COMMUNICATION
    BINA NUSANTARA UNIVERSITY
    JAKARTA

    Kaila Company has a Body Butter Division that could use this body lotion in one of its products.
    The Body Butter Division will need 5,000 body lotions per year. It has received a quote of $60
    per body lotion from another manufacturer.

    Required:
    1. Assume that the Body Lotion Division is now selling only 20,000 body lotions per year
    to outside customers. Can the selling division and buying division negotiate for the
    transfer price? Calculate the lower and upper acceptable transfer price!
    2. Assume that the Body Lotion Division is selling 28,000 of the body lotions it can produce
    to outside customers. Can the selling division and buying division negotiate for the
    transfer price? Calculate the lower and upper acceptable transfer price!
    3. Assume that the Body Lotion Division selling all the speackers at cost to Body Butter
    Division. Can they still get profit for their divison? Which one is better, negotiated
    transfer price or transfer at cost for the selling division?

    Answer :
    1. The Body Lotion Devision selling 20.000/year
    Lower Transfer Price

    Transfer price ≥ Variable cost per unit + CM on Lost Sales


    Number of units transferred

    Transfer price ≥ $45 + 0


    0
    Transfer price ≥ $45
    Higher Possible Transfer Price
    Transfer price ≤ Cost of buying from outside supplier
    Transfer price ≤ $60
     The range of transfer price : $45-$60
    $ 45 ≤ x ≤ $60
    2. The Body Lotion Division selling 28,000
    BACHELOR OF ACCOUNTING
    FACULTY OF ECONOMICS AND COMMUNICATION
    BINA NUSANTARA UNIVERSITY
    JAKARTA

    Lower Transfer Price


    Transfer price ≥ Variable cost per unit + CM on Lost Sales
    Number of units transferred
    Transfer price ≥ $45 + ($70 - $45) × 3000
    5000
    Transfer price ≥ 60
    Higher possible transfer price
    Transfer price ≤ Cost of buying from outside supplier
    Transfer price ≤ 60
     The lower and higher transfer price is the same. So, customer and supplier can’t
    negotiate a price. Transfer price = $60
    3. Transfer tat cost = $ 45
    Then, the price is transfer $ 45 - $ 60 if division body lotion sold all body lotion with a fee to
    division body butter and the division will not make money. So, the transfer is better than the
    transfer of the cost of sales division

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