Module 5 Case Assignment Example | Topics and Well Written Essays - 750 words

Module 5 Case - Assignment Example (Drury, 2004) These divisions are obligated to transact amongst themselves, the costs are decided by using a transfer. Even though the transfer prices may not differ much from the market prices, one of the divisions or the company as a whole in such a transaction go at a loss The buying divisions may buy for more than the principal market price or the selling division can sell below the market price, hence affecting their performance. This can either result into a loss or gain in any or all of the divisions. The company can also make a profit or a loss (Tully, 2012) Table1 of Supply Division C Quantity Manufactured Quantity supplied Current supply Price per unit Total Cost Proposed supply Price per unit Total Cost Supplier C part 101 2,000 3,000 $900 $2,700,000 2,000 $900 $1,800,000 Supplier C part 201 500 1,000 $900 $900,000 500 $1,900 $950,000 From the table 1: Division C will experience a loss, since it, supply of Part 101 reduces from a volume of $2,700,000 to $1,800,000. The tra nsfer price is $2,000 while the market price for this part 101 is $900. Even though the total volume of supply of part 201 to Division B indicates a slight drop from the transfer price. The overall transaction for this division is a loss. Table2 for Buying Division A Quantity Bought Current purchase Price per unit Total Cost Proposed Purchases Price per unit Total Cost Supplier C part 101 3,000 $900 $2,700,000 2,000 $900 $1,800,000 External Supplier part 101 1,000 $900 $900,000 2,000 $900 $1,800,000 The buying division A will be in profit, because the price for the part A is $900. This price is less than the transfer price of $1,000. Even though the quantity supplied by Division C has reduced, they have increased their purchase volume from the external supply from 1,000 units to 2,000 units Table three for buying division B Quantity Bought Current Purchases Price per unit Total Cost Proposed Purchase Price per unit Total Cost Supplier C part 201 1,000 $900 $900,000 2,000 $900 $1,800 ,000 External Supplier part 201 1,000 $900 $900,000 1,500 $1,900 $2,850,000 Division B is a buying division will be in profit if the proposal is implemented. This is driven by two factors: they will have to buy more units both from division C and Externally at a price less than the transfer price. The transfer price is put at $2,000 while the market price for part 201 is $1,900. Profit will be $4,650,000-$1,800,000 =$3,250,000 Table 4 External Supplier Current supply Price per unit Total Cost Proposed supply Price per unit Total Cost Supplier part 101 to A 3,000 $900 $2,700,000 2,000 $900 $1,800,000 Supplier part 201 to B 1,000 $900 $900,000 1,500 $1,900 $2,850,000 From the above data, the company will make a loss since the overall increase in the external supply of both parts. The internal supplier namely the division C is disadvantaged in the new proposal. The total supply by this division will be a total 2,500 units, while external supplier will bring in 3,500 units. Division A: Buying division or downstream Part 101 Transfer cost = $1,000 Current Operation Units bought currently = (3,000 units from supplier C + 1,000 units from External supplier) = 4,000 units Unit cost = $ 900 Total cost = $ 900 X 4,000 = $36,000

A Consulting Opportunity in Any Area of Commercial Essay

A Consulting Opportunity in Any Area of Commercial - Essay Example The researcher states that organizations invest in business aspects that would profess in terms of sales. In this sense, businesses invest in such research during emergencies. It is vital to highlight that sales projection would best occur at all periods of a business. In the traditional context, revenue projections and cash flows are viewed as the key controls for managing a business. However, the sales forecast is a vital management of other figures to business. It becomes a critical point of initiating ventures in an existing business. In sales forecasting, consultancy would achieve a different route since it relies on accurate data. This creates a necessity for having a consultancy system that calculates data for a given piece of advice. For established businesses, the consultancy project would help in identifying prior years’ figures that are vital for drafting a sales forecast. This considers the sales’ growth expectations. On the other hand, small businesses woul d necessitate scenarios of studying the industry. This would relate to a compilation of consumers’ profiles and understand the existing and the expected competition. In the end, the consultancy would help in striking the sense of making sales’ projections. It also aims at heralding sales forecasting as a less cryptic endeavor. This is a time series methodology of establishing a sales’ projection according to a manifesting pattern from the earlier period sales. Another method relates to the regression analysis method. This method also utilizes historical sales as a basis for predicting future sales. In this sense, the forecaster strives to foster a relationship between the sales and the independent variables. Autonomous variables encompass the GDP and population. In simple regression analysis, forecasting involves the use of one independent variable. Conversely, multiple regression analysis would entail the employment of two or more independent variables.