ACCT3203 - Managerial Accounting - Unskilled Labour - Raw material - Cost - Accounting Assessment Answer

ACCT3203 - Managerial Accounting - Unskilled Labour - Raw material - Cost - Accounting Assessment Answer

Assessment Task:

A Mi. minimum and maximum transfer prices, international issues  Mimosa Company Ltd manufactures dashboard instruments for heavy construction machinery. The firm is based in Brisbane, but operates several divisions in Australia, New Zealand, the Philippines, Malaysia and Indonesia.

The Wellington division manufactures complex electrical panels that are used in a variety of the firm’s instruments. There are two basic types of panels.

1. The high-density panel (HDP) is capable of many functions and is used in the most sophisticated instruments, such as tachometers and pressure gauges.
2. The low-density panel (LDP) is much simpler and is used in less-complicated instruments.
3. Although there are minor differences among the different high-density panels, the basic manufacturing process and production costs are the same. The high-density panels require considerably more skilled labour than the low-density panels, but the unskilled labour needs are about the same. Moreover, the cost of direct materials in the high-density panel is much higher than that of the low-density panel. Production costs are summarised as follows. Note that all amounts are in Australian currency.
4.  Draw a simple diagram depicting the two divisions and the flow of their products. Also, show the two alternatives that the Manila division has in the production of its TCH 320.                                                                                                                                                                                                                         

                                                                                                                 
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