题型：论述题 难度星级：★★★★★ 
5.6万热度
a division with capital employed of $400,000 currently earns an roi of 22%. it can make an additionalinvestment of $50,000 for a five year life with nil residual value. the average net profit from thisinvestment would be $12,000 after depreciation. the division's cost of capital is 14%.
what are the residual incomes before and after the investment
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this question appeared in the june 2015 exam.
at the start of the year, a division has non-current assets of $4 million and makes no additions ordisposals during the year. depreciation is charged at a rate of 10% per annum on all non-currentassets held at the end of the year. working capital is $0.5 million at the start of the year althoughthis is expected to increase by 20% by the end of the year. the budgeted profit of the division afterdepreciation is $1.2 million.
what is the expected roi of the division for the year, based on average capital employed
a27.59%
26.37%
18.39%
31.58%
this question appeared in the june 2015 exam.
a division is considering investing in capital equipment costing $2.7m. the useful economic life ofthe equipment is expected to be 50 years, with no resale value at the end of the period. theforecast return on the initial investment is 15% per annum before depreciation. the division's costof capital is 7%
what is the expected annual residual income of the initial investment
a$0
($270,000)
$162,000
$216,000
swal has two divisions, sw and al, which operate as profit centres and have full autonomy inmaking, buying and selling decisions.
sw manufactures sw at a cost of $12 per unit. the market price of sw is $16 per unit.
al uses sw in manufacturing its own product. the transfer price of sw when transferred fromdivision sw to division al is set at full production cost plus 20%.
which one of the following independent circumstances represents dysfunctional behaviourarising from swal's transfer pricing policy
asw refuses to sell sw to al as there is unlimited demand for sw in the external market.
al refuses to order from sw as it can buy sw from the open market at lower than currenttransfer price. as a result, sw sells all its units on the open market.
sw refuses to transfer below market price so al is forced to buy from the external market.
sw agrees to sell to al but has to cancel the sale in order to fulfil an urgent customer orderwho is willing to pay a higher price for immediate delivery.
the following information relates to an investment centre, which is a separate product division in alarge company.
$
net current assets 60,000
non-current assets 240,000
profit before depreciation 50,000
depreciation 10,000
the company's cost of capital is 10%. what is the most appropriate measure of the centre's returnon investment (roi)
a3.3%
13.3%
16.7%
20.8%
which of the following is not a disadvantage of using market value as a transfer price
the market price might be a temporary one.
use of market price might act as a disincentive to use up spare capacity.
many products do not have an equivalent market price.
the external market might be perfect.
the transfer pricing system operated by a divisional company has the potential to make a significantcontribution towards the achievement of corporate financial objectives.
required
explain the potential benefits of operating a transfer pricing system within a divisionalised company.
choose the correct words from those highlighted.
roi based on profits as a % of net assets employed will (a) increase/decrease as an asset gets older andits book value (b) increases/reduces. this could therefore create an (c) incentive/disincentive toinvestment centre managers to reinvest in new or replacement assets.
an investment centre with capital employed of $570,000 is budgeted to earn a profit of $119,700 nextyear. a proposed fixed asset investment of $50,000, not included in the budget at present, will earn aprofit next year of $8,500 after depreciation. the company's cost of capital is 15%. what is the budgetedroi and residual income for next year, both with and without the investment
roi residual income
without investment ……………….. ………………..
with investment ……………….. ………………..
fill in the blanks.
ideally, a transfer price should be set that enables the individual divisions to maximise their profits at alevel of output that maximises ……………………. .
the transfer price which achieves this is unlikely to be a ……………….. transfer price or a……………. transfer price.
if optimum decisions are to be taken, transfer prices should reflect …………………. .
there are two profit centres, a and b. profit centre a transfers a product to profit centre b, butcould also sell the product in an external market at a price of $30. the marginal cost of making theproduct in profit centre a is $8 per unit and the full cost is $14 per unit. there would be a variablecost of $1 per unit for sales and distribution to customers in the external market, but no such costsfor internal transfers.
to avoid disputes between the profit centre managers, what should be the transfer price for theproduct
$ _______