Kohber is a Swiss-company that makes medical equipment. It recently purchased a company, which manufactures packaging for high-value drugs. Since it will run the packaging company as a separate division, it would seem that Kohber is departmentalized by: customer O function size geography product
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- Sembotix Company has several divisions including a Semiconductor Division that sells semiconductors to both internal and external customers. The company’s X-ray Division uses semiconductors as a component in its final product and is evaluating whether to purchase them from the Semiconductor Division or from an external supplier. The market price for semiconductors is $100 per 100 semiconductors. Dave Bryant is the controller of the X-ray Division, and Howard Hillman is the controller of the Semiconductor Division. The following conversation took place between Dave and Howard: Dave: I hear you are having problems selling semiconductors out of your division. Maybe I can help. Howard: You’ve got that right. We’re producing and selling at about 90% of our capacity to outsiders. Last year, we were selling 100% of capacity. Would it be possible for your division to pick up some of our excess capacity? After all, we are part of the same company. Dave: What kind of price could you give…Manning Systems is a commercial software vendor that sells billing and other financial software to companies around the globe. Manning operates a centralized call center for customer support calls. Costs associated with use of the center are charged to the division with primary responsibility for the client. There are four geographical divisions: North America (NA), Central and South America (SA), Europe, and Asia-Pacific (APAC). The allocation is based on the length of time of calls made (Minutes). Idle time of the reservation agents and the fixed cost of the equipment are allocated based on the number of calls received (Calls) from clients in each division. Due to recent increased competition in the commercial software business, Manning has decided that it is necessary to better allocate its costs in order to price its services competitively and profitably. During the most recent period for which data are available, the use of the call center for each division was as follows:…Cable Network System Bhd (CNS) is a supplier of equipment to telecommunication companies such as Maxis, Celcom and Astro. It has two division, Component Division and the Equipment Division. CNS adopts a decentralized management system where managers are essentially free to determine whether goods will be transferred internally and what would be the internal transfer prices. CNS policy is that for all internal transfers between divisions, the transfer price be expressed on a full cost basis. The markup in the full cost arrangement is left to the discretion of divisional managers. The managers of the two division held a meeting to discuss on the pricing arrangement for a mini- antennae produced by the component division. Production of the mini-antennae is currently at full capacity. The Component Division can sell the mini-antennae for RM 46.50 to outside customers. The Equipment Division can also buy the mini-antennae from external sources for the same price. The manager of the…
- Cable Network System Bhd (CNS) is a supplier of equipment to telecommunication companies such as Maxis, Celcom and Astro. It has two division, Component Division and the Equipment Division. CNS adopts a decentralized management system where managers are essentially free to determine whether goods will be transferred internally and what would be the internal transfer prices. CNS policy is that for all internal transfers between divisions, the transfer price be expressed on a full cost basis. The markup in the full cost arrangement is left to the discretion of divisional managers. The managers of the two division held a meeting to discuss on the pricing arrangement for a mini- antennae produced by the component division. Production of the mini-antennae is currently at full capacity. The Component Division can sell the mini-antennae for RM 46.50 to outside customers. The Equipment Division can also buy the mini-antennae from external sources for the same price. The manager of the…Lansing Electronics Inc. manufactures a variety of printers, scanners, and fax machines in itstwo divisions: the PSF Division and the Components Division. The Components Division produces electronic components that can be used by the PSF Division. All the components thisdivision produces can be sold to outside customers. However, from the beginning, nearly allof its output has been used internally. The current policy requires that all internal transfers ofcomponents be transferred at full cost.Recently, Cam DeVonn, the chief executive officer of Lansing Electronics, decided to investigate the transfer pricing policy. He was concerned that the current method of pricing internaltransfers might force decisions by divisional managers that would be suboptimal for the firm. Aspart of his inquiry, he gathered some information concerning Component Y34, which is usedby the PSF Division in its production of a basic scanner, Model SC67.The PSF Division sells 40,000 units of Model SC67 each year…Clonal, Inc., a biotechnology company, developed and patented a diagnostic product called Trouver. Clonal purchased some research equipment to be used exclusively for Trouver and subsequent research projects. Clonaldefeated a legal challenge to its Trouver patent, and began production and marketing operations for the project.Corporate headquarters’ costs were allocated to Clonal’s research division as a percentage of the division’ssalaries.Required:1. How should the equipment purchased for Trouver be reported in Clonal’s income statements and statementsof financial position?2. a. Describe the accounting treatment of research and development costs
- Phoenix Inc., a cellular communication company, has multiple business units, organized as divisions. Each division’s management is compensated based on the division’s operating income. Division A currently purchases cellular equipment from outside markets and uses it to produce communication systems. Division B produces similar cellular equipment that it sells to outside customers—but not to division A at this time. Division A’s manager approaches division B’s manager with a proposal to buy the equipment from division B. If it produces the cellular equipment that division A desires, division B will incur variable manufacturing costs of $60 per unit. Relevant Information about Division B Sells 90,000 units of equipment to outside customers at $130 per unit Operating capacity is currently 80%; the division can operate at 100% Variable manufacturing costs are $70 per unit Variable marketing costs are $8 per unit Fixed manufacturing costs are $900,000 Income per Unit for Division A…Miller Manufacturing (2M) makes a variety of components for mechanized agricultural equipment. The products are similar but not identical, and all go through many of the same processes. 2M sells products worldwide and has to comply with various regulations regarding environmental and health and safety compliance. For the most part, 2M manufacturing practices comply with or exceed requirements in the countries to which it ships its products, but depending on the specific part ordered, it might have to go through additional certification processes to make the sale. The company produces to order and never has any work-in-process inventories. The manufacturing facility uses a job costing system for product costing. Manufacturing overhead is applied to jobs based on direct labor cost. The cost analyst at 2M recently put together an estimate of overhead for the coming year, which is shown in the following table: Category Amount Fabricating $ 480,000 Machining 960,000 Machine setup…Large, diversified companies often will sell products/components from one division to another division rather than purchase from an outside supplier. Transfer price is the term used to describe the amount one division pays to another division within the same company to purchase a component part. Therefore, if are the Boat Hull Manufacturing Company and we produce boat parts at the manufacturing facility in Virginia. The managerial accountant reported that Boat Hull Manufacturing manufactures parts to repair the container ships that import products from China. The main part that Boat Hull Manufacturing produces is the T24 part. The Port Department produces the T24 part at the Boat Hull Manufacturing facility in Virginia. The managerial accountant reported that the Deport Department could also produce the T24 part because there is excess capacity at the facility. The managerial accountant reported the current market price of the T24 part is $420 and reported the following…
- Comm Devices (CD) is a division of Worldwide Communications, Inc. CD produces restaurant pagers and other personal communication devices. These devices are sold to other Worldwide divisions, as well as to other communication companies. CD was recently approached by the manager of the Personal Communications Division regarding a request to make a special emergency- response pager designed to receive signals from anywhere in the world. The Personal Communications Division has requested that CD produce 12,000 units of this special pager. The following facts are available regarding the Comm Devices Division. Selling price of standard pager Variable cost of standard pager Additional variable cost of special pager For each of the following independent situations, calculate the minimum transfer price, and determine whether the Personal Communications Division should accept or reject the offer. (a) The Personal Communications Division has offered to pay the CD Division $105 per pager. The CD…Walker Accounting Software is marketed to small accounting firms throughout the U.S. and Canada. Owner George Walker has decided to outsource the company's help desk and is considering three providers: Manila Call Center (Philippines), Delhi Services (India), and Moscow Bell (Russia). The following table summarizes the data Walker has assembled. Which outsourcing firm has the best rating? (Higher weights imply higher importance and higher ratings imply more desirable providers.) In the following table, compute the weighted average score for each of the three providers (enter your responses rounded to one decimal place). Weight Manila Delhi Moscow Criterion Flexibility (W) (A) (B) 0.50 Trustworthiness 0.10 Price 0.20 Delivery 0.20 5689 3 7 6 7 7 J1208 (C) 9 9 Total weighted score:You are the Chief Accountant of Triple Bhd, a Malaysian company that has two wholly owned overseas subsidiaries. - Company X is located in Germany. The company assembles computer terminals from materials provided by Triple. Once assembled, the computer terminals are shipped to the Malaysia where Triple sells them. - Company Z is located in Taiwan and produces computers using materials supplied by local companies in Taiwan. Company Z sells its computers to customers throughout Southeast Asia. Required: Explain how translation for each of the above two foreign subsidiaries should be dealt with in the consolidated financial statements of Triple Bhd.