问答题
2.Mobe Co manufactures electronic mobility scooters. The company is split into two divisions: the scooter division(Division S) and the motor division (Division M). Division M supplies electronic motors to both Division S and toexternal customers. The two divisions run as autonomously as possible, subject to the group’s current policy thatDivision M must make internal sales first before selling outside the group; and that Division S must always buy itsmotors from Division M. However, this company policy, together with the transfer price which Division M chargesDivision S, is currently under review.
Details of the two divisions are given below.
Division S
Division S’s budget for the coming year shows that 35,000 electronic motors will be needed. An external supplier could supply these to Division S for $800 each.
Division M
Division M has the capacity to produce a total of 60,000 electronic motors per year. Details of Division M’s budget,which has just been prepared for the forthcoming year, are as follows:
Budgeted sales volume (units) 60,000
Selling price per unit for external sales of motors $850
Variable costs per unit for external sales of motors $770
The variable cost per unit for motors sold to Division S is $30 per unit lower due to cost savings on distribution and packaging.
Maximum external demand for the motors is 30,000 units per year.
Required:
Assuming that the group’s current policy could be changed, advise, using suitable calculations, the number ofmotors which Division M should supply to Division S in order to maximise group profits. Recommend the transferprice or prices at which these internal sales should take place.
Note: All relevant workings must be shown. (10 marks)
【正确答案】Mobe Co.
From the group’s perspective
For every motor sold externally, Division M generates a profit of $80 ($850 –$770) for the group as a whole. For every motorwhich Division S has to buy from outside of the group, there is an incremental cost of $60 per unit ($800 –[$770 –$30]).Therefore, from a group perspective, as many external sales should be made as possible before any internal sales are made.Consequently, the group’s current policy will need to be changed. This does, however, assume that the quality of the motors boughtfrom outside the group is the same as the quality of the motors made by Division M.
Division M’s total capacity is 60,000 units. Given that it can make external sales of 30,000 units, it can only supply 30,000 ofDivision S’s demand for 35,000motors. These 30,000 units should be bought from Division M since, from a group perspective,the cost of supplying these internally is $60 per unit cheaper than buying externally. The remaining 5,000 motors required byDivision S should then be bought in from the external supplier at $800 per unit.
In order to work out the transfer price which should be set for the internal sales of 30,000 motors, the perspective of both divisionsmust be considered.
From Division M’s perspective
Division M’s only buyer for these 30,000 motors is Division S, so the lowest price it would be prepared to charge is the marginal cost of making these units, which is $740 per unit. However, it would ideally want to make some profit on these motors too and would consequently expect a significantly higher price than this.
From Division S’s perspective
Division S knows that it can buy as many external motors as it needs from outside the group at a price of $800 per unit. Therefore,this will be the maximum price which it is prepared to pay.
Overall
Therefore, the transfer price should be set somewhere between $740 and $800. From the perspective of the group, the total groupprofit will be the same irrespective of where in this range the transfer price is set. However, it is important that divisional managersand staff remain motivated. Given the external sales price which Division M can achieve and the fact that Division S would haveto pay $800 for each motor bought from outside the group, the transfer price should probably be at the higher end of the range.