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MGT605 Assignment 1 Spring 2020  

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27/07/2020 7:05 am  

MGT605 Advanced Cost and Management Accounting Assignment 1 Solution & Discussion Spring 2020


SEMESTER FALL 2020

ADVANCED COST AND MANAGEMENT ACCOUNTING (MGT605)

ASSIGNMENT NO. 01 

DUE DATE: 28TH July, 2020 MARKS: 30

 

Learning Outcomes

After going through this assignment, the students should be able to:

  • Understand Transfer pricing analysis

Assignment

XYZ company is in a business of manufacturing Zinc. The business deals in only one product which is manufactured by division A. 80% of the product is sold to ABC company, whereas, 20% of the product is sold to Division B of XYZ company. The unit cost of Zinc is as follows;

  • Direct material - 8
  • Direct labor - 4
  • Direct expenses - 4
  • Variable manufacturing expenses - 4
  • Fixed manufacturing expenses - 8
  • Selling and packing exp – variable - 2

30

The company sells around 20,000 units to ABC company at a price of Rs. 60. Whereas; 5,000 units are sold to division B at a transfer price of Rs. 58. This price obtained by deducting packing expense.

Division B converts Zinc into another finished product named Zinc-II, which requires additional costs;

  • Direct material and components - 46
  • Direct labor - 5
  • Variable overheads - 24
  • Fixed overheads - 24
  • Selling and packing exp –var - 1

100

However, there has been a disagreement between the manager of division B and manager of division A regarding the transfer pricing. Division B manager argued that the transfer pricing should not be Rs. 60 in fact it should be cost plus and additional markup. He stated that a price of Rs. 24 is justified as it covers a reasonable contribution of fixed overheads of division A.

In this regard a study of the relationship between selling price and demand was conducted by the sales director. The resulting report contains:

 

•      Division A

 

–    Selling price

40

60

80

–    Demand

30000

20000

10000

•      Division B

 

 

 

–    Selling price

80

90

100

–    Demand

7200

5000

2800

Requirements:

  • What is the effect of transfer pricing system on the company’s profits?
  • What will be the effect of transfer price of 24 on the company’s profits?

 

IMPORTANT:

24 hours extra / grace period after the due date is usually available to overcome uploading difficulties. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.

 

OTHER IMPORTANT INSTRUCTIONS:

DEADLINE:

  • Make sure to upload the solution file before the due date on
  • Any submission made via email after the due date will not be

FORMATTING GUIDELINES:

  • Use the font style “Times New Roman” or “Arial” and font size “12”.
  • It is advised to compose your document in MS-Word
  • You may also compose your assignment in Open Office
  • Use black and blue font colors

RULES FOR MARKING

  • Please note that your assignment will not be graded or graded as Zero (0), if:
  • It is submitted after the due
  • The file you uploaded does not open or is
  • It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF
  • It is cheated or copied from other students, internet, books, journals

 

Note related to load shedding: Please be proactive Dear students!

As you know that semester activities have started and load shedding problem is also prevailing in our country. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments or GDBs.

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anser
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28/07/2020 11:23 am  

Kindly share solution of mgt605 as today is the last day


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anser
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28/07/2020 11:29 am  

Kindly share solution of assignment 


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anser
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28/07/2020 11:31 am  

Kindly share solution of assignment mgt605 


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anser
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28/07/2020 9:31 pm  

Kindly upload assignment solution of mgt605 


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anser
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28/07/2020 9:31 pm  

Kindly upload assignment solution of mgt605 


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arslan1991
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28/07/2020 9:34 pm  

anyone got solution???

 


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admin
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28/07/2020 9:43 pm  

@arslan1991 @anser

 

Please try to solve assignment by discussion and ideas or any thing you know about assignment this will aslo clears your concepts, and finally you will be able to solve it yourself. 

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anser
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28/07/2020 10:17 pm  

@arslan1991 nobody is replying 


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arslan1991
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28/07/2020 10:20 pm  

contribution margin approach use hoge


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anser
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29/07/2020 12:13 am  

@arslan1991 dear mention it properly 


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anser
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29/07/2020 11:13 am  

Kindly share solution of mgt605 


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