Prepare estimated profit statements for the month

Assignment Help Managerial Accounting
Reference no: EM132092661

Assessment

Management accounting - application of internal accounting approaches and critical analysis of the results of the same in order to impact on performance, as well as analysis of the techniques themselves .

Brady Ltd. has within it a division called Ostweiler which produces widget oil and sells it to an internal refining division called Brees at the market price as of the start of the year.

The production capacity for Ostweiler is 3000 tonnes per month with a variable cost per tonne of £90 and a fixed cost of £160,000 per month but only produces 2,400 tonnes as this is all Brees can use and no sales are made to any external markets.

Ostweiler sells 2,400 tonnes to the Brees at £300 per tonne which was the market price at the start of the year 1 January.

Brees make 100 bottles of pure oil per tonne and sell it for £6 per bottle. In addition to the transfer price from Ostweiler division the variable cost of production is £80 per 100 bottles made and £100,000 in fixed costs per month.

As from 1 June competitive pressure has forced the wholesale trade price down to £270 per tonne. Brees contend that the transfer price to them should be the same as the new market price. Ostweiler refutes the argument on the basis that the original budget established the price for the whole budget year.

Brees say that they would be able to sell enough bottles to use up all of Ostweilers capacity of 3,000 tonnes and sell 300,000 bottles if they dropped the price to £5.40 a bottle and would do this if the price from Ostweiler dropped to £270 per tonne.

Required:

(a) Prepare estimated profit statements for the month of June for each division based on:
i. transfer prices of £300 per tonne and sales from Ostweiler to Brees of 2,400 tonnes who then sell 240,000 bottles at £6 per bottle.
ii. transfer prices of £270 per tonne and sales from Ostweiler to Brees of 3,000 tonnes who then sell 300,000 bottles at £5.40 per bottle.

(b) Critically evaluate the need for effective transfer pricing and discuss two methods which may be adopted to achieve this.

(c) Discuss how non-financial measures might be of use in the evaluation of organisational performance

Verified Expert

We have calculated transfer pricing and profitability of both divisions. Further, we have also evaluated non-financial performance measures. We have also analyzed the methods of transfer pricing.

Reference no: EM132092661

Questions Cloud

Determining the market price per share : Fluid Inc common stock will trade at the price/earnings ratio of 8, the market price per share.
Discuss the differences between the three major approaches : Discuss the differences between the three major approaches surrounding collection and analysis of data i,e., quantitative, qualitative, and mixed methods.
Establish a set of rules and guidelines for society : TLG has explained to the GC owners that it is vital to understand the legal system and processes, including the court system and jurisdiction of the courts.
Percentage return on assets for 2018 : Venus Corporation in 2018 financial statements show the following
Prepare estimated profit statements for the month : University of Derby - Discuss how non-financial measures might be of use in the evaluation of organisational performance - Critically evaluate the need
What is the required return on the firm stock : If a firm's B is 3, and the market return is 10%, what is the required return on the firm's stock if the risk-free rate is 5%?
What ethical concept applied to corporation : What ethical concept applied to corporation? Explain Milton Friedman critique of the concept of corporate social responsibility?
Behavioral finance with traditional finance : What is the difference between behavioral finance with traditional finance?
The crimes of false imprisonment and kidnapping : Determine whether or not the jurisdiction in which the crime has occurred should consider the man's actions as assault.

Reviews

len2092661

8/22/2018 3:09:51 AM

Assessment markers can give you feedback and allocate marks to you using a range of methods and tools that are appropriate to the specific module and assessment. The marker may make comments within your script (in bubbles) and may also give you written comments in the long box. They may give you a form of audio or video feedback. When they give you feedback on your assessment, as a minimum, your marker will tell you: • if and how you have met the relevant learning outcomes • the areas within which you did well in this assessment (they will commend you) • the areas you could have improved in this assessment (they will make suggestions) • what activities you can work on to help you in your next studies (you can take these ideas forward with you, and may discuss them with your Personal Tutor. You can also build them into your Action Planning. In this module specifically, they will use the specified Marking schemes for each Coursework assessment as the feedback and marking structure will be specific to each component.

len2092661

8/22/2018 3:09:45 AM

Marking scheme Subject knowledge, understanding and judgment 25% subject matter 25% Critical awareness and analysis 25% synthesis of ideas into a logical, coherent report 15% Presentation (Written) of key concepts / ideas 10% Feedback, marking criteria and grading of your assessment This section tells you how the marker will assess your work fairly. All markers aim for our feedback to be: timely, individual to you, helpful, empowering and manageable. They will also offer you opportunities to discuss the marking criteria they intend to use, and the type of feedback they intend to give you. You should create a shared understanding of this with them and your peers during the course of the module. They may also give you opportunities to assess your own work and the work of your peers. Look out for these opportunities.

len2092661

8/22/2018 3:09:31 AM

35-39% Unsatisfactory Overall marginally unsatisfactory; some sound aspects but some of the following weakness are evident; inadequate critical analysis and evaluation; little evidence of originality; not well researched; standard presentation unacceptable; ideas are unclear and incoherent; some significant errors and misunderstandings. Marginal fail. 21-34% Poor Below the pass standard; a poor critical analysis and evaluation, virtually no evidence of originality; poorly researched; presentation unacceptable and not up to graduate standard; ideas confused and incoherent, some serious misunderstandings and errors. A clear fail, short and pass standard. 1-20% Very Poor Well below the pass standard, with many serious errors. Standard of presentation totally unacceptable, incoherent and may be severely under- length. No evidence of evaluation or application. A very clear fail, well short of the pass standard.

len2092661

8/22/2018 3:09:23 AM

50-59% Good A good standard; a fairly good level of critical analysis and evaluation; some evidence of original thinking or originality; quite well researched; a good standard of presentation; ideas generally clear and coherent, some evidence of misunderstandings; some deficiencies in presentation. 40-49% Satisfactory A sound standard of work; a fair level of critical analysis and evaluation; little evidence of original thinking of originality; adequately researched; a sound standard of presentation; ideas fairly clear and coherent, some significant misunderstandings and errors; some weakness in style or presentation but satisfactory overall.

len2092661

8/22/2018 3:09:25 AM

% mark Grade Descriptors 70-100% Excellent Outstanding; high to very high standard; a high level of critical analysis and evaluation, inclusive original thinking; commendable originality; exceptionally well coherence and logic. Trivial or very minor errors. 60-69% Very Good A very good standard; a very good level of critical analysis and evaluation; significant originality; well researched; a very good standard of presentation; commendable clarity of ideas; thoughtful and effective presentation; very good sense of coherence and logic; minor errors only.

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd