Case
Uitwerking Case 6 Accounting BEC-22806
- Course
- Institution
Full elaboration of the sixth case of accounting.
[Show more]
Seller
Follow
JeskeKnol
Reviews received
Content preview
Problem 6.1Subunit "Sewing and Cutting" → Selling division
Subunit "Sizing and Fitting" → Buying division
Final selling price (per unit): € 300.00
Total costs (for both divisions): TC = 200 + 6Q^2
No market at all → Transfer-price = Marginal cost of producing at the optimal level for the company as a whole.
The marginal cost (MC) is the first derivative of the cost function (TC) with respect to the output quantity (Q).
MC(for both selling and buying) = 12Q
MR (buying) = 300
Net MR (for buying) = 300 - 12Q
Setting marginal costs of the selling division equal to the net marginal return of the buying division gives:
12Q = 300 - 12Q
24Q = 300
Q = 12.5 → 13 (= the optimal number of units sold)
MC(= transfer-price): € 150.00
Profits: € 1,472.00
Problem 6.2
Net Present Value (NPV)
H D L
Initial investment expenditure 1,000,000 900,000 800,000
Cash flow year 1: 225,000 250,000 200,000
Cash flow year 2: 225,000 250,000 220000
Cash flow year 3: 225,000 225,000 242000
Cash flow year 4: 225,000 202,500 266200
Cash flow year 5: 225,000 182,250 292820
Estimated NPV (5%) -25.86775 68.61096 247.5069
Residual income (RI)
Huey (H) 1 2 3 4 5
Net cash flow 225,000 225,000 225,000 225,000 225,000
Depreciation 200000 200000 200000 200000 200000
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller JeskeKnol. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.34. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
64438 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now