FM-BINUS-AA-FPU-797/R0

BACHELOR OF ACCOUNTING
FACULTY OF ECONOMICS AND COMMUNICATION
BINA NUSANTARA UNIVERSITY
JAKARTA
ASSESSMENT FORM
Course: Management Accounting
Method of Assessment: Case Study Analysis
Semester/Academic Year : Odd/2019-2020

Name of Lecturer :
Date :
Class :
Topic :

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Group Members :
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Learning Goals:
LG 1 – Profitability analysis - Each student should be able to analyze how to treat the increase and decrease of profit
LG 2 – Transfer pricing - Each student should be able to make decision related to transfer pricing

Learning Objectives:
L.Obj-2.2 Able to generate managerial accounting information to support decision-making (related to cost behavior, CVP, and BEP)
L.Obj-2.3 Able to generate managerial accounting information to support planning and controls (budgeting, standard costing, and variance analysis)
No Assessment criteria Weight Excellent (85 - 100)
Able to generate
Profitability analysis correct calculation of
the increase or
1 Ability to generate 50%
decrease of profit to
profitability information
support decision
to make decision
making
Transfer pricing Able to generate
correct calculation of
2 Ability to generate 50% all acceptable transfer
information about transfer price, and able to give
pricing to make decision right recommendation
Total Score: ∑(Score x Weight)
FM-BINUS-AA-FPU-797/R0
(Score x
Good (75-84) Average (65-74) Poor (0 - 64) Score
Weight)
Able to understand
Able to generate some Unable to generate
correct calculation of
the concept but there
correct calculation of
are a lot of error
the increase or the increase or
calculation of the
decrease of profit to decrease of profit to
increase or decrease
support decision support decision
of profit to support
making making
decision making
Able to understand
Able to generate some the concept but there Unable to generate
correct calculation of are a lot of error correct calculation of
all acceptable transfer calculation of all all acceptable transfer
price, but unable to acceptable transfer price, and unable to
give right price, but unable to give right
recommendation give right recommendation
recommendation
 FM-BINUS-AA-FPU-797/R0

Remarks:
 FM-BINUS-AA-FPU-797/R0

ASSESSMENT METHOD

Case Study:

Case 1
Hairdo Products manufactures 30,000 units of part K-7 each year for use on its production line. At this
level of activity, the cost per unit for part K-7 is:

Direct materials . . . . . . . . . . . . . . . . . . . . . $ 4
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . $12
Variable manufacturing overhead . . . . . . . $5
Fixed manufacturing overhead . . . . . . . . . $12
Total cost per part . . . . . . . . . . . . . . . . . . . $25

An outside supplier has offered to sell 20,000 units of part K-7 each year to Hairdo Products for $21
per part. If Hairdo Products accepts this offer, the facilities now being used to manufacture part K-7
could be rented to another company at an annual rental of $100,000. However, Hairdo Products has
determined that two-thirds of the fixed manufacturing overhead being applied to part K-7 would
continue even if part K-7 were purchased from the outside supplier.

Required:
Prepare computations showing how much profits will increase or decrease if the outside supplier’s
offer is accepted.
 FM-BINUS-AA-FPU-797/R0

Case 2 (30%)
Kaila Company’s Body Lotion Division produces a body lotion that is used by manufacturers of various body butter products. Sales and cost data on
the body lotion follow:

Selling price per unit on the intermediate market . . . . . . . . .$70

Variable costs per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45
Fixed costs per unit (based on capacity) . . . . . . . . . . . . . . . $10
Capacity in units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000

Number of body lotion:

Produced during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Sold to outside customers . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000

Kaila Company has a Body Butter Division that could use this body lotion in one of its products. The
Body Butter Division will need 5,000 body lotions per year. It has received a quote of $60 per body lotion
from another manufacturer.

Required:
1. Assume that the Body Lotion Division is now selling only 20,000 body lotions per year to outside
customers. Can the selling division and buying division negotiate for the transfer price? Calculate the lower and upper acceptable transfer price!
2. Assume that the Body Lotion Division is selling 28,000 of the body lotions it can produce to outside
customers. Can the selling division and buying division negotiate for the transfer price? Calculate the lower and upper acceptable transfer price!
 FM-BINUS-AA-FPU-797/R0

3. Assume that the Body Lotion Division selling all the speackers at cost to Body Butter Division. Can they still get profit for their divison? Which
one is better, negotiated transfer price or transfer at cost for the selling division?