F2003 fall solution

F2003 fall solution - Concordia University COMM 305/2 Fall...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Concordia University COMM 305/2 Fall 2003 John Molson School of Business                                                                                                            Solution to Final Exam     QUESTION 1 MULTIPLE CHOICE MARKING KEY No. on Test Correct Answer Marks 1 C 2 2 B 2 3 C 1 4 C 2 5 B 1 6 A 2 7 A 2 8 D 2 9 C 2 10 B 2 11 B 2 12 B 2 Total 22 marks
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Concordia University COMM 305/2 Fall 2003 John Molson School of Business                                                                                                            Solution to Final Exam     Question 2 Suggested Solution 1. The Phoenix divisional manager will likely be opposed to the transfer. Currently, the division is selling all the units it produces at $520 each. With transfers taking place at $490, Phoenix will suffer a $30 drop in sales revenue and profit on each unit that is sent to Tucson. (3 marks) 2. Although Tucson is receiving a $30 “price break” on each unit purchased from Phoenix, the $490 transfer price would probably be deemed too high. The reason: Tucson will lose $25 on each refrigeration system produced and sold. Sales revenue $1,285 Less: Variable manufacturing costs $820 Transfer price paid to Phoenix 490 1,310 Income (loss) $ (25 ) (5 marks) 3. Kendall uses a responsibility accounting system, awarding bonuses based on divisional performance. The two divisional managers (or their representatives) should negotiate a mutually agreeable price. (2 marks) 4. Kendall would benefit more if it sells the condenser externally. Observe that the transfer price is ignored in this evaluation—one that looks at the firm as a whole. Produce Condenser; Sell Externally Produce Condenser; Transfer; Sell Refrigeration System Sales revenue $520 $1,285 Less: Variable cost $380; $380 + $820 380 1,200 Contribution margin $140 $ 85 (5 marks)
Background image of page 2
Concordia University COMM 305/2 Fall 2003 John Molson School of Business                                                                                                         
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 7

F2003 fall solution - Concordia University COMM 305/2 Fall...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online