Management Accounting

  
CLUK is a producer of sports nutrition drinks and has two divisions, D1 and D2. Division D1 manufactures recyclable plastic containers which it sells to both Division D2 and also external customers. Division D2 makes high protein drinks which it sells to the retail trade in the containers that it purchases from Division D1.
You have been provided with the following budget information for Division D1:
  

$
 
Selling   price to retail customers per 1,000 containers

130
 
Variable   costs per container

0.04
 
Fixed Costs   per annum

2.4 million
 
Net Assets

4.0 million
  
Production   capacity

40,000,000 containers
 
Retail   demand for containers

38,000,000 containers
 
Demand for   containers from Division D2

20,000,000 containers
You have been provided with the following budget information for Division D2:
  

$
 
Selling per   container of protein drink

0.50
 
Variable   costs per drink (excluding container)

0.15
 
Cost per   container (from Division D1)

At transfer price
 
Fixed Costs

1,750,000
 
Net assets

12,650.000
 
Sales   volume of protein drinks in containers

20,000,000
Transfer Pricing Policy
Division D1 is required to satisfy the demand of Division D2 before selling containers externally. The transfer price for a container is full cost plus 20%.
Performance Management Targets
Divisional performance is assessed on Return on Investment (ROI) and Residual Income (RI). Divisional managers are awarded a bonus if they achieve the annual ROI target of 25%. CLUK has a cost of capital of 7%.
Required:
REQUIRED:
(a) Produce a three-page PowerPoint presentation to incorporate the following tasks:
(i) SLIDE 1
Using Excel, produce a profit statement for each division detailing sales and costs, separating external sales and inter-divisional transfers. You are advised to produce this statement in a Excel spreadsheet first and then copy this information into the PowerPoint slide 
(ii) SLIDE 2
Using Excel, calculate the ROI for division D1 and division D2. Copy this information into Slide 2 of the PowerPoint presentation
(iii) SLIDE 3
Provide a brief commentary on the divisionalised profit statements and ROI results shown in slides 1 and 2
(b) The directors of CLUK are planning to expand the operations of the company and together with the divisional managers, have agreed to purchase a new machine that would increase annual production capacity to 50,000,000 cans at Division D1.
The purchase of this machine will increase the net assets of Division D1 by $500,000. Assume that there is no impact on unit variable costs or fixed costs resulting from this purchase. Inter-divisional transfers will be priced at opportunity cost.
You are required to produce a report to the directors critically discussing the issues and implications of the Transfer Pricing Policy on this investment and divisional profits. You should support your answer with suitable analysis and revised profit statements (these should be included as appendices to your report). Your report should be produced in a Word document containing no more than 1,000 words (+/- 10%).

find the cost of your paper

QUIZ

  When using the free-cash flow model, cash flows are discounted at the weighted average cost of capital (WACC) and when using the dividend discount model, dividends are discounted at….

Dixie’s Daughter’s Book Quiz Assignment

Dixie’s Daughter’s Book Quiz Assignment Directions: After reading Dixie’s Daughters:  The United Daughters of the Confederacy and the Preservation of Confederate Culture:   please answer the following questions about the book.  ….

Its 4 page essay

PLEASE READ INSTRUCTIONS CAREFULLY Purpose: To write a response to Gloria Anzaldua’s “How to Tame a Wild Tongue,” a chapter in her book Borderlands/La Frontera. In your response, you should….