Mac3761 exam
, QUESTION 1
_(a) Budgeted internal transfer price per dish-set_
Direct materials:
- Round steel (4.5 kg × R40/kg) = R180
- LNB = R144
- Mounting bracket = R62
Total direct materials = R386
Direct labour:
- 150 minutes × (R30/hour ÷ 60) = R75
Total direct costs = R386 + R75 = R461
Adding FMO (R6,600,000 ÷ 1,100,000 units):
R461 + (R6,600,000 ÷ 1,100,000) = R461 + R6 = R467
Budgeted internal transfer price per dish-set = R467
_(b) Correctness of Financial Manager's statement_
Minimum transfer price = External selling price - Incremental costs
= R510 - (R461 - Contribution to FMO)
= R510 - (R461 - R6)
, QUESTION 1
_(a) Budgeted internal transfer price per dish-set_
Direct materials:
- Round steel (4.5 kg × R40/kg) = R180
- LNB = R144
- Mounting bracket = R62
Total direct materials = R386
Direct labour:
- 150 minutes × (R30/hour ÷ 60) = R75
Total direct costs = R386 + R75 = R461
Adding FMO (R6,600,000 ÷ 1,100,000 units):
R461 + (R6,600,000 ÷ 1,100,000) = R461 + R6 = R467
Budgeted internal transfer price per dish-set = R467
_(b) Correctness of Financial Manager's statement_
Minimum transfer price = External selling price - Incremental costs
= R510 - (R461 - Contribution to FMO)
= R510 - (R461 - R6)
