管理會計雙語版學習輔助資料

管理會計ManagerialAccounting（雙語32）學習輔助資料2013-2014-1學期

第一部分授課計劃使用教材：ManagerialAccounting（會計學--管理會計分冊，JamesM.Reeve等，杜興強改編）,中國人民大學出版社，教育部高校工商管理類教學指導委員會雙語教學推薦教材總計學時：32周次月/日講課課外作業(yè)課外閱讀章節(jié)名稱時數內容及題數時數參考書頁數19.2-9.7Chapter18ManagerialAccountingConceptsandPrinciples2見輔助資料人民大學出版社29.8-9.14Chapter18ManagerialAccountingConceptsandPrinciples2同上《管理會計學》39.15-9.21Chapter21CostBehaviorandCVPAnalysis2同上第6版49.22-9.28Chapter21CostBehaviorandCVPAnalysis2同上59.29-10.5Chapter21CostBehaviorandCVPAnalysis2同上610.6-10.12Chapter22Budgeting2同上710.13-10.19Chapter22Budgeting2同上810.20-10.26Chapter23PerformanceEvaluationUsingVariancesfromStandardCosts2同上910.27-11.2Chapter23PerformanceEvaluationUsingVariancesfromStandardCosts2同上1011.3-11.9Chapter23PerformanceEvaluationUsingVariancesfromStandardCosts2同上1111.10-11.16Chapter24PerformanceEvaluationforDecentralizedOperations2同上1211.17-11.23Chapter24PerformanceEvaluationforDecentralizedOperations2同上1311.24-11.30Chapter25DifferentialAnalysisandProductPricing2同上1412.1-12.7Chapter25DifferentialAnalysisandProductPricing2同上1512.8-12.14Chapter25DifferentialAnalysisandProductPricing2同上1612.15-12.21ReviewandTest2同上第二部分成績評定項目次數方式及要求分值課堂考核—點名、專業(yè)術語默寫、課堂翻譯、提問等（請假需導員簽字的假條，無特殊情況，請假3次，算1次缺課；遲到等同于缺課；缺課6課時，本課記0分）20%課后作業(yè)8日常作業(yè)6次，綜合練習2次。要求書面。雷同者記0分30%期末測試1全英文，閉卷，120分鐘50%第三部分主要內容Terminology 專業(yè)術語（自查中文，了解術語的含義）MajorContents 本章主要內容（給出的是教材上的一級和二級標題，加※的部分略看，其他需要精讀）Questions 思考題（取自每一章課后的EyeOpeners）SchoolAssignments——作業(yè)題（需要做書面作業(yè)）Chapter18ManagerialAccountingConceptsandPrinciplesTerminology:managerialaccounting(ormanagementaccounting);financialaccounting;financialstatements;stakeholders;shareholders;creditor;governmentagencies;generalpublic;linedepartment;staffdepartment;managementprocess;planning;directing;controlling;improving;decisionmaking;strategyplanning;operationalplanning;managementbyexception;GenerallyAcceptedAccountingPrinciples;servicecompanies;merchandisingcompanies;manufacturingcompanies;directcost;indirectcost;periodcosts;productcosts;manufacturingcosts;costobject;directmaterialscost;directlaborcost;factoryoverhead;primecosts;conversioncosts;sellingexpenses;administrativeexpenses;costofmerchandisesold;costofgoodssold;materialsinventory;workinprocessinventory;finishedgoodsinventory;balancesheet;incomestatement;merchandiseavailableforsale;costofgoodsmanufactured;costoffinishedgoodsavailableforsale;statementofcostofgoodsmanufactured.MajorContents:ManagerialAccountingDifferencesBetweenManagerialAccountingandFinancialAccountingTheManagementAccountantintheOrganizationManagerialAccountingintheManagementProcessManufacturingOperations:CostsandTerminologyDirectandIndirectCostsManufacturingCostsFinancialStatementsforaManufacturingBusinessBalanceSheetforaManufacturingBusinessIncomestatementforamanufacturingcompanyUsesofManagerialAccountingQuestions:(onpage20一21)Eyeopeners:1,4,13,14,15,16,18,20,21.Schoolassignments:No.Chapter21CostBehaviorandCost-Volume-ProfitAnalysisTerminology:costbehavioractivitybaserelevantrangevariablecostsvariablecostperunitorunitvariablecostfixedcostsfixedcostperunitmixedcostshigh-lowmethodvariablecostingcost-volume-profitanalysissellingpricesalesvolumeproductionvolumeprofitincomefromoperationscontributionmarginunitcontributionmargincontributionmarginratioorprofit-volumeratiobreak-evenpointbreak-evensales(units)break-evensales(dollars)targetprofitcost-volume-profitchartbreak-evenchartprofit-volumechart“whatif"analysisorsensitivityanalysissalesmixoperatingleveragemarginofsafetymarginofsafety(units)marginofsafety(dollars)MajorContents: (★allshouldbereadintensively)CostBehaviorVariableCostsFixedCostsMixedCostsCost-Volume-ProfitRelationshipContributionMarginContributionMarginRatioUnitContributionMarginMathematicalApproachtoCost-Volume-ProfitAnalysisTargetProfitGraphicApproachtoCost-Volume-ProfitAnalysisCost-Volume-Profit(Break-Even)ChartProfit-VolumeChartUseofComputersinCost-Volume-ProfitAnalysisAssumptionsofCost-Volume-ProfitAnalysisSpecialCost-Volume-ProfitRelationshipSalesMixConsiderationsOperatingLeverageMarginofSafetyQuestions:(onpage99一100)Eyeopeners:1;3;9;11;14;15.Schoolassignment:PR21-1AWestCoastApparelCo.manufacturesavarietyofclothingtypesfordistributiontoseveralmajorretailchains.Thefollowingcostsareincurredintheproductionandsaleofbluejeans:SalaryofproductionvicepresidentPropertytaxesonproperty,plant,andequipmentElectricitycostsof$0.12perkilowatt-hourSalesperson'ssalary,$30,000plus2%ofthetotalsalesConsultingfeeof$100,000paidtoindustryspecialistformarketingadviceShippingboxesusedtoshipordersDyeThreadSalaryofdesignersBrassbuttonsJanitorialsupplies,$2,000permonthLegalfeespaidtoattorneysindefenseofthecompanyinapatentinfringementsuit,$40,000plus$150perhourStraight-linedepreciationonsewingmachinesInsurancepremiumsonproperty,plant,andequipment,$50,000peryearplus$4per$20,000ofinsuredvalueover$10,000,000Hourlywagesofmachineoperatorsp.FabricRentalcostsofwarehouse,$4,000permonthplus$3persquarefootofstorageusedr.Rentonexperimentalequipment,$40,000peryearLeatherforpatchesidentifyingthebrandonindividualpiecesofapparelt.SuppliesInstructionsClassifytheprecedingcostsaseitherfixed,variable,ormixed.Usethefollowingtabularheadingsandplacean"X〃intheappropriatecolumn.Identifyeachcostbyletterinthecostcolumn.CostFixedCostVariableCostMixedCostPR21-5ADatarelatedtotheexpectedsalesofsnowboardsandskisforWinterSportsInc.forthecurrentyear,whichistypicalofrecentyears,areasfollows:ProductsUnitSellingPriceUnitVariableCostSalesMixSnowboards$250.00$170.0040%Skis340.00160.0060%Theestimatedfixedcostsforthecurrentyearare$420,000.InstructionsDeterminetheestimatedunitsofsalesoftheoverallproductnecessarytoreachthebreak-evenpointforthecurrentyear.Basedonthebreak-evensales(units)inpart(1),determinetheunitsalesofbothsnowboardsandskisforthecurrentyear.Assumethatthesalesmixwas60%snowboardsand40%skis.Comparethebreak-evenpointwiththatinpart(1).Whyisitsodifferent?PR21-6ASoldnerHealthCareProductsInc.expectstomaintainthesameinventoriesattheendof2010asatthebeginningoftheyear.Thetotalofallproductioncostsfortheyearisassumedtobeequaltothecostofgoodssold.Withthisinmind,thevariousdepartmentheadswereaskedtosubmitestimatesofthecostsfortheirdepartmentsduring2010.Asummaryreportoftheseestimatesisasfollows:

EstimatedFixedCostEstimatedVariableCost(perunitsold)Productioncosts:Directmaterials—$18.00Directlabor—12.00Factoryoverhead$318,0009.00Sellingexpenses:Salessalariesandcommissions65,5004.00Advertising22,500—Travel5,000—Miscellaneoussellingexpense5,5003.50Administrativeexpenses:Officeandofficers'salaries65,000—Supplies8,0001.50Miscellaneousadministrativeexpense10,5002.00Total$500,000$50.00Itisexpectedthat20,000unitswillbesoldatapriceof$100aunit.Maximumsaleswithintherelevantrangeare25,000units.InstructionsPrepareanestimatedincomestatementfor2010.Whatistheexpectedcontributionmarginratio?Determinethebreak-evensalesinunits.Constructacost-volume-profitchartindicatingthebreak-evensales.Whatistheexpectedmarginofsafetyindollarsandasapercentageofsales?Determinetheoperatingleverage.PR21-1BGaelicIndustriesInc.,operatingatfullcapacity,sold22,350unitsatapriceof$150perunitduring2010.Itsincomestatementfor2010isasfollows:Sales$3,352,500Costofgoodssold2,200,000Grossprofit$1,152,500Expenses:Sellingexpenses$250,000Administrativeexpenses250,000Totalexpenses500,000Incomefromoperations$652,500Thedivisionofcostsbetweenfixedandvariableisasfollows:FixedVariableCostofsales60%40%Sellingexpenses50%50%Administrativeexpenses55%45%Managementisconsideringaplantexpansionprogramthatwillpermitanincreaseof$900,000inyearlysales.Theexpansionwillincreasefixedcostsby$242,500,butwillnotaffecttherelationshipbetweensalesandvariablecosts.InstructionsDeterminefor2010thetotalfixedcostsandthetotalvariablecosts.Determinefor2010(a)theunitvariablecostand(b)theunitcontributionmargin.Computethebreak-evensales(units)for2010.Computethebreak-evensales(units)undertheproposedprogram.Determinetheamountofsales(units)thatwouldbenecessaryundertheproposedprogramtorealizethe$652,500ofincomefromoperationsthatwasearnedin2010.Determinethemaximumincomefromoperationspossiblewiththeexpandedplant.Iftheproposalisacceptedandsalesremainatthe2010level,whatwilltheincomeorlossfromoperationsbefor2011?Basedonthedatagiven,wouldyourecommendacceptingtheproposal?Explain.Chapter22BudgetingTerminology:budgetsresponsibilitycenterbudgetaryslackgoalconflictcontinuousbudgetingzero-basedbudgetingstaticbudgetflexiblebudgetmasterbudgetincomestatementbudgetssalesbudgetproductionbudgetdirectmaterialspurchasesbudgetdirectlaborcostbudgetfactoryoverheadcostbudgetcostofgoodssoldbudgetsellingandadministrativeexpensesbudgetbudgetedincomestatementbalancesheetbudgetscashbudgetcapitalexpendituresbudgetbudgetbalancesheetoperatingactivitiesfinancingactivitiesinvestingactivitiesMajorContents:NatureandObjectivesofBudgetingObjectivesofBudgetingHumanBehaviorandBudgetingBudgetingSystemsStaticBudgetFlexibleBudgetComputerizedBudgetingSystemsMasterBudgetIncomeStatementBudgetsSalesBudgetProductionBudgetDirectMaterialsPurchasesBudgetDirectLaborCostBudgetFactoryOverheadCostBudgetCostofGoodsSoldBudgetSellingandAdministrativeExpensesBudgetBudgetedIncomeStatementsBalanceSheetBudgetsCashBudgetCapitalExpendituresBudgetBudgetedBalanceSheetQuestions:(onpage125—126)Eyeopeners:1,3,5,6,8,11,12,14.Schoolassignments:(Preparinganoperatingbudget)Randy'sKayaks,Inc.,manufacturesandsellsonepersonfiberglasskayaks.Randy,sbalancesheetfortheyearendedDecember31,2011,wasasfollows：RANDY'SKAYAKS,INC.BalanceSheetDecember31,2011AssetsLiabilitiesCurrentassetsCurrentliabilitiesCash$52,000Accountspayable$131,000Accountsreceivable1,200,000Incometaxespayable45,000Inventories:Totalcurrentliabilities176,000Rawmaterials$120,000Long-termliabilitiesFinishedgoods287.500407.500Notespayable70.000Totalcurrentassets1,659,500Totalliabilities246,000Stockholders'EquityPlantAssets,netofaccumulateddepreciation2.250,000Commonstock1,600,000Retainedearnings2.063.500Totalequity3,663,500Totalassets$3,909,500Totalliabilitiesandstockholders'equity$3,909,500

ThefollowingadditionaldataaboutRandy'ssales,productioncosts,andotherexpensesfollow:Randy'sKayaks,Inc.,additionaldata:TimeperiodforwhichtobudgetCashcollections:(allsalesareonaccount)Collectedinthequarterofsale40%Collectedinthequarteraftersale60%Baddebtpercentage1%Cashdisbursements:Paidinquarterofpurchase70%Paidinquarterafterpurchase30%Endingrawmaterialsinventory40%ofnextquarter'ssalesEndingfinishedgoodsinventory10%ofnextquarter'ssalesBeginningrawmaterialsinventory,12/31/201140,000poundsBeginningfinishedgoodsinventory,12/31/20111,000kayaksBudgetedsales,1stquarter,201210,000kayaksBudgetedsales,2ndquarter,201215,000kayaksBudgetedsales,3rdquarter,201216,000kayaksBudgetedsales,4thquarter,201214,000kayaksBudgetedsales,1stquarter,201310,000kayaksEquipmentpurchases,1stquarter,2012$30,000purchased1/1/2012Equipmentpurchases,2ndquarter,2012$0Equipmentpurchases,3rdquarter,2012$0Equipmentpurchases,4thquarter,2012$150,000purchased12/30/2012Quarterlydividendsdeclaredandpaideachquarterin2012$4,000Expectedsalespriceperunit$400.00Standardcostdata:Directmaterials$3.00perpound,10poundsperkayakDirectlabor$20.00perDLhour,10hoursperkayak

Variablefactoryoverhead$5.00perDLhourFixedfactoryoverhead$34,375permonthVariableselling(includesuncollectibleaccountexpense)$25.00perkayakFixedsellingandadministrativeexpenses:Insurance$45,000perquarterSalessalaries$30,000perquarterDepreciationexpense一manufacturing$9,000perquarterDepreciationexpense-selling$6,000perquarterMinimumrequiredcashbalance$50,000Interestrateonloans6%Loansaremadeandrepaidin$10,000incrementsattheendofeachquarter.Provisionforincometaxpayableisassumedtostaythesame.InstructionPreparethesalesbudget.Preparetheproductionbudget.Preparethesellingandadministrativebudget.Preparethedirectmaterialspurchasesbudget.Preparethedirectlaborcostbudget.Preparethefactoryoverheadcostbudget.Preparethecostofgoodssoldbudget.Preparethecashbudget.Preparethebudgetedincomestatement.Preparethebudgetedbalancesheet.Chapter23PerformanceEvaluationUsingVariancesfromStandardCostsTerminology:performanceevaluationstandardcostidealstandardsortheoreticalstandardscurrentlyattainablestandardsofnormalstandardstandardpricestandardquantitybudgetperformancereportcostvariancesfavorablecostvarianceunfavorablecostvariancedirectmaterialscostvariancedirectmaterialspricevariancedirectmaterialsquantityvariancedirectlaborcostvariancedirectlaborratevariancedirectlabortimevariancefactoryoverheadcostvariancevariablefactoryoverheadcontrollablevariancefixedfactoryoverheadvolumevariancevariablefactoryoverheadratefixedfactoryoverheadratenonfinancialperformancemeasureMajorContents:StandardsSettingStandardsTypesofStandardsReviewingandReviseStandardsCriticismsofStandardCostsBudgetaryPerformanceEvaluationBudgetPerformanceReportManufacturingCostVariancesDirectMaterialsandDirectLaborVariancesDirectMaterialsVariancesDirectLaborVariancesFactoryOverheadVariancesTheFactoryOverheadFlexibleBudgetVariableFactoryOverheadControllableVarianceFixedFactoryOverheadVolumeVarianceReportingFactoryOverheadVariancesFactoryOverheadAccountRecordingandReportingVariancesfromStandardsNonfinancialPerformanceMeasuresQuestions:(onpage20一21)Eyeopeners:1,2,3,9,15.Schoolassignment:PR23-1ADirectmaterialsanddirectlaborvarianceanalysisBestBathwareCompanymanufacturesfaucetsinasmallmanufacturingfacility.Thefaucetsaremadefromzinc.Manufacturinghas50employees.Eachemployeepresentlyprovides36hoursoflaborperweek.Informationaboutaproductionweekisasfollows:Standardwageperhr. $14.60Standardlabortimeperfaucet 15min.Standardnumberoflbs.ofzinc 1.6lbs.Standardpriceperlb(磅).ofzinc $11.50Actualpriceperlb.ofzinc $11.75Actuallbs.ofzincusedduringtheweek 12,400lbs.Numberoffaucetsproducedduringtheweek7,500Actualwageperhr. $15.00Actualhrs.perweek 1,800hrs.InstructionsDetermine(a)thestandardcostperunitfordirectmaterialsanddirectlabor;(b)thepricevariance,quantityvariance,andtotaldirectmaterialscostvariance;and(c)theratevariance,timevariance,andtotaldirectlaborcostvariance.PR23-1BDirectmaterials,directlabor,andfactoryoverheadcostvarianceanalysis.VintageDressesInc.manufacturesdressesinasmallmanufacturingfacility.Manufacturinghas20employees.Eachemployeepresentlyprovides35hoursofproductivelaborperweek.Informationaboutaproductionweekisasfollows:Standardwageperhr.$10.80Standardlabortimeperdress12min.Standardnumberofyds.offabricperdress3.8yds.Standardpriceperyd.offabric$2.90Actualpriceperyd.offabric$2.75Actualyds.offabricusedduringtheweek12,100yds.Numberofdressesproducedduringtheweek3,250Actualwageperhr.$11.00Actualhrs.perweek700hrs.InstructionsDetermine(a)thestandardcostperdressfordirectmaterialsanddirectlabor;(b)pricevariance,quantityvariance,andtotaldirectmaterialscostvariance;and(c)ratevariance,timevariance,andtotaldirectlaborcostvariance.PR23-3ADirectmaterials,directlabor,andfactoryoverheadcostvarianceanalysis.RoadReadyTireCo.manufacturesautomobiletires.Standardcostsandactualcostsfordirectmaterials,directlabor,andfactoryoverheadincurredforthemanufactureof5,200tireswereasfollows:StandardCostsActualCostsDirectmaterials71,000lbs.at$5.1070,600lbs.at$5.00Directlabor1,300hrs.at$17.501,330hrs.at$17.80FactoryoverheadRatesperdirectlaborhr.,basedon100%ofnormalcapacityof1,350directlaborhrs.:Variablecost,$3.10Fixedcost,$4.90$4,000variablecost$6,615fixedcostEachtirerequires0.25hourofdirectlabor.InstructionsDetermine(a)thepricevariance,quantityvariance,andtotaldirectmaterialsvariance;(b)theratevariance,timevariance,andtotaldirectlaborcostvariance;(c)variablefactoryoverheadcontrollablevariance,thefixedfactoryoverheadvolumevariance,andtotalfactoryoverheadcostvariance.PR23-3BDirectmaterials,directlabor,andfactoryoverheadcostvarianceanalysisEasternPolymers,Inc.,processesabasechemicalintoplastic.Standardcostsandactualcostsfordirectmaterials,directlabor,andfactoryoverheadincurredforthemanufactureof23,500unitsofproductwereasfollows:StandardCostsActualCostsDirectmaterials 4,280lbs.at$8.10Directlabor 2,350hrs.at$17.504,250lbs.at$8.322,400hrs.at$17.00Factoryoverhead Ratesperdirectlaborhr.,basedon100%ofnormalcapacityof2,000directlaborhrs.:Variablecost,$2.20Fixedcost,$3.50$5,020variablecost$7,000fixedcostEachunitrequires0.1hourofdirectlabor.InstructionsDetermine(a)thepricevariance,quantityvariance,andtotaldirectmaterialscostvariance;(b)theratevariance,timevariance,andtotaldirectlaborcostvariance;and(c)variablefactoryoverheadcontrollablevariance,thefixedfactoryoverheadvolumevariance,andtotalfactoryoverheadcostvariance.Chapter24PerformanceEvaluationforDecentralizedOperationsTerminology:centralizedoperationsdecentralizedoperationsresponsibilityaccountingresponsibilitycentercostcenterprofitcenterinvestmentcenterbudgetperformancereportcontrollablerevenuescontrollableexpensesactivitybaseservicedepartmentchargeratereturnofreturnoninvestment(ROI)orrateofreturnonassetsresidualincomeDuPontformulaprofitmargininvestmentturnoveroperatingprofitabilityoperatingefficiencybalancescorecardfinancialperformancecustomerserviceinnovationandlearninginternalprocessestransferpricemarketpriceapproachnegotiatedpriceapproach\costapproachMajorContents:CentralizedandDecentralizedOperationsAdvantagesofDecentralizationDisadvantagesofDecentralizationResponsibilityAccountingResponsibilityAccountingforCostCentersResponsibilityAccountingforProfitCentersServiceDepartmentChargesResponsibilityAccountingforInvestmentCentersRateofReturnonInvestmentResidualIncomeTheBalanceCard

TransferPricingMarketPriceApproachNegotiatedPriceApproachCostPriceApproachQuestions:(onpage176)Eyeopeners:1,2,6,7,9,12,13,14.Schoolassignment:PR"1ABudgetpArfomsncereportforacostCenterCustomersefvicesalaries￡260,450PR"1ABudgetpArfomsncereportforacostCenterCustomersefvicesalaries￡260,450InsuranceandpropertytaxesM.600□stribbiiDnshades415.40DMarketingsaldries489.700Engineersslanes39B.5DDWarehousewagss27&.1DDEquipmentdepfeciatiofiB7,5。。Total51,卵5,W50DuringOctober,thecostsincurredintheTruckDivisionwereasfollows:Customerservicesalads$333.37DInsuranceandpropertytaxes52.960Distribuflonsalarifls411,250Mark&lm^salaries54B.460Enqrieer詞那陪390，&30Warehousewages267.93&Eqjpmentdepreciation8T,觀Total賣物，碩Instructions1PnepareabudgeIperformancereportforthedirectoroftheTruckDivisionforthemonthofOctober.2.Porwhichcostsmightthedirectorbeexpectedtorequestsupplementalreports?

BrowningTransportationCo.hasthreeregionaldivisionsorganizedasprofitcenters.Thechiefexecutiveofficer(CEO)evaluatesdivisionalperformance,usingincomefromobj.3?1.Incomefromoperations,MetroDivision,$274,400operationsasapercentofrevenues.ThefollowingquarterlyincomeandexpenseaccountswereprovidedfromthetrialbalanceasofDecember31z2010:obj.3?1.Incomefromoperations,MetroDivision,$274,400$600,000710,000$600,000710,000980,000362.400393,540527,76087,500300,000122.400204,000Revenues-WestDivisionRevenues—MetroDivisionOperatingExpenses-EastDivisionOperatingExpenses-WestDivisionOperatingExpenses-MetroDivisionCorporateExpenses-ShareholderRelationsCorporateExpenses-CustomerSupportCorporateExpenses-LegalGeneralCorporateOfficers1SalariesThecompanyoperatesthreeservicedepartments:ShareholderRelations,CustomerSupport,andLegal.TheShareholderRelationsDepartmentconductsavarietyofservicesforshareholdersofthecompany.TheCustomerSupportDepartmentisthecompany'spointofcontactfornewservice,complaints,andrequestsforrepair.TheEastWestMetroNumberofcustomercontacts 3,750 4,500 6,750Numberofhoursbilled 850 1,360 1,190InstructionsPreparequarterlyincomestatementsshowingincomefromoperationsforthethreedivisions.Usethreecolumnheadings:East,West,andMetro.Identifythemostsuccessfuldivisionaccordingtotheprofitmargin.Roundtotwodecimalplaces.ProvidearecommendationtotheCEOforabettermethodforevaluatingtheperformanceofthedivisions.Inyourrecommendation,identifythemajorweaknessofthepresentmethod.PR24-4AEffectofproposalsondivisionalperformanceobj.4AcondensedincomestatementfortheSnowboardDivisionofNewWaveRidesInc.fortheyearendedDecember31,2010PR24-4AEffectofproposalsondivisionalperformanceobj.4$1,200,000826,000$1,200,000826,000$374,000230,000$144,000$1,000,000CostofgoodssoldGrossprofitOperatingexpensesIncomefromoperationsInvestedassetsAssumethattheSnowboardDivisionreceivednochargesfromservicedepartments.ThepresidentofNewWaveRideshasindicatedthatthedivision'srateofreturnona$1,000,000investmentmustbeincreasedtoatleast18%bytheendofthenextyearifoperationsaretocontinue.Thedivisionmanagerisconsideringthefollowingthreeproposals:Proposal1:Transferequipmentwithabookvalueof$40,000tootherdivisionsatnogainorlossandleasesimilarequipment.Theannualleasepaymentswouldexceedtheamountofdepreciationexpenseontheoldequipmentby$24>000.Thisincreaseinexpensewouldbeincludedaspartofthecostofgoodssold.Saleswouldremainunchanged.Proposal2:Purchasenewandmoreefficientmachiningequipmentandtherebyreducethecostofgoodssoldby$120,000.Saleswouldremainunchanged,andtheoldequipment,whichhasnoremainingbookvalue,wouldbescrappedatnogainorloss.Thenewequipmentwouldincreaseinvestedassetsbyanadditional$600,000fortheyear.Proposal3:Reduceinvestedassetsbydiscontinuinganengineline.Thisactionwouldeliminatesalesof$330,000,costofgoodssoldof$286,300,andoperatingexpensesof$65,000.Assetsof$420,000wouldbetransferredtootherdivisionsatnogainorloss.InstructionsUsingtheDuPontformulaforrateofreturnoninvestment,determinetheprofitmargin,investmentturnover,andrateofreturnoninvestmentfortheSnowboardDivisionforthepastyear.Preparecondensedestimatedincomestatementsandcomputetheinvestedassetsforeachproposal.UsingtheIXiPontformulaforrateofreturnoninvestment,determinetheprofitmargin,investmentturnover,andrateofreturnoninvestmentforeachproposal.Whichofthethreeproposalswouldmeettherequired18%rateofreturnoninvestment?IftheSnowboardDivisionwereinanindustrywheretheprofitmargincouldnotbeincreased,howmuchwouldtheinvestmentturnoverhavetoincreasetomeetthepresident'srequired18%rateofreturnoninvestment?PR24-6ATransferpricingPR24-6ATransferpricingobj.5BayAreaScientific,Inc.manufactureselectronicproducts,withtwooperatingdivisions,thePerformanceMaterialsandCommunicationTechnologiesdivisions.Condenseddivisionalincomestatements,whichinvolvenointracompanytransfersandwhichincludeabreakdownofexpensesintovariableandfixedcomponents,areasfollows:BayAreaScientific,Inc.DivisionalIncomeStatementsFortheYearEndedDecember31,2010?3.Totalincomefromoperations,$253,000PerformanceMaterialsDivisionCommunicationTechnologiesDivisionTotalSales:8,000units@$78perunit$624,000$624,00012,000units@$152perunit$1,824,0001,824,000$624,000$1,824,000$2,448,000Expenses:Variable:8,000units@$58perunit$464,000$464,00012,000units@$108*perunit$1,296,0001,296,000Fixed124,000288,000412,000Totalexpenses$588,000$1,584,000$2,172,000Incomefromoperations$36,000$240,000$276,000*$78ofthe$108perunitrepresentsmaterialscosts,andtheremaining$30perunitrepresentsothervariableconversionexpensesincurredwithintheCommunicationTechnologiesDivision.ThePerformanceMaterialsDivisionispresentlyproducing8,000unitsoutofatotalcapacityof9,600units.MaterialsusedinproducingtheCommunicationTechnologiesDivision'sproductarecurrentlypurchasedfromoutsidesuppliersatapriceof$78perunit.ThePerformanceMaterialsDivisionisabletoproducethematerialsusedbytheCommunicationTechnologiesDivision.Exceptforthepossibletransferofmaterialsbetweendivisions,nochangesareexpectedinsalesandexpenses.Instructions-Wouldthemarketpriceof$78perunitbeanappropriatetransferpriceforBayAreaScientific,Inc.?Explain.-IftheCommunicationTechnologiesDivisionpurchases1,600unitsfromthePerformanceMaterialsDivision,ratherthanexternally,atanegotiatedtransferpriceof$64perunit,howmuchwouldtheincomefromoperationsofeachdivisionandthetotalcompanyincomefromoperationsincrease?PreparecondenseddivisionalincomestatementsforBayAreaScientific,Inc.,basedonthedatainpart(2)Ifatransferpriceof$70perunitisnegotiated,howmuchwouldtheincomefromoperationsofeachdivisionandthetotalcompanyincomefromoperationsincrease?a.-WhatistherangeofpossiblenegotiatedtransferpricesthatwouldbeacceptableforBayAreaScientific,Inc.?b.Assumingthatthemanagersofthetwodivisionscannotagreeonatransferprice,whatpricewouldyousuggestas