• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

sourcing decisions and selling decisions

Forums › ACCA Forums › ACCA MA Management Accounting Forums › sourcing decisions and selling decisions

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • February 8, 2017 at 12:50 pm #371607
    abobo96
    Member
    • Topics: 1
    • Replies: 4
    • ☆

    please am seeking help on the question below

    The Pillercat Corporation is a highly decentralized company. Each division manager has full authority for sourcing decisions and selling decisions. The machining division of Pillercat has been the major supplier of the 2,000 crankshafts that the tractor division needs each year. The tractor division, however, has just announced that it plans to purchase all its crankshafts in the forthcoming year from two external suppliers at $200 per crankshaft.
    The machining division of Pillercat recently increased its selling price for the forthcoming year to $220 per unit (from $200 per unit in the current year).
    Juan Gomez, manager of the machining division, feels that the 10% price increase is justified. It results from a higher depreciation charge on some new specialized equipment used to manufacture crankshafts and an increase in labor costs. Gomez wants the president of Pillercat Corporation to force the tractor division to buy all its crankshafts from the machining division at the price of $220. The following table summarizes the key data.
    Particulars $
    Number of crankshafts purchased by tractor division 2,000
    External supplier’s market price per crankshaft 200
    Variable cost per crankshaft in machining division 190
    Fixed cost per crankshaft in machining division 20
    Required
    1. Compute the advantage or disadvantage in terms of annual operating income to the ePillercat Corporation as a whole if the tractor division buys crankshafts internally from the machining division under each of the following cases:

    a. The machining division has no alternative use for the facilities used to manufacture crankshafts.
    b. The machining division can use the facilities for other production operations, which will result in annual cash operating savings of $29,000.
    c. The machining division has no alternative use for its facilities, and the external supplier drops the price to $185 per crankshaft.

    February 8, 2017 at 3:41 pm #371646
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54659
    • ☆☆☆☆☆

    This question is on transfer pricing which is not examinable in Paper F2 (it is examined in Paper F5).
    If you watch our free lectures on transfer pricing then you will be able to do the question yourself 🙂
    (The free lectures are a complete course for Paper F5 and cover everything needed to be able to pass the exam well.)

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘sourcing decisions and selling decisions’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • barbjohn on Equity Law, Ratio Decidendi – ACCA LW Global
  • Kakui on Equity Law, Ratio Decidendi – ACCA LW Global
  • Nicholas1239798 on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)
  • Starmoon123 on Strategy formulation (Part 2) – ACCA (AFM) lectures
  • nosiphoceliwedlamini@gmail.com on Revenue – Example 5 (profitable contracts) – ACCA Financial Reporting (FR)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in