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Final Exam 2013c
Final Exam 2013c
Course Description
Date of
exam
Duration of exam
including reading time
04
2 hrs 15 mins
Pages
INSTRUCTIONS TO CANDIDATES
Write your full name and student number on each examination booklet together with the number of
examination books used. Students must not write during reading time.
This is a CLOSED BOOK Exam.
This examination paper contains 4 questions.
Attempt all questions and all parts of questions. Commence each question on a new page. Carry out
the instructions on the front cover of the examination booklet.
This examination paper adds to 40 marks and comprises 40% of the total marks allocated in this
course. To obtain a pass in this course, you must achieve at least 50 marks overall.
You may take in non-text storing, non-programmable calculators. However, the use of other
electronic devices (eg. computers, electronic dictionaries, phones) is not allowed.Only non-text
storing, non-programmable calculators may be used.
The use of dictionaries, whether in electric form or print form, is not permitted.
Essential tables, rates and formula sheets are attached to this paper refer to appendices
Page 1
Page 2
$
3.0
2.0
3.0
3.0
0.5
0.5
2.0
If an internal transfer to the Retail Division occurs, it is estimated that 50% of packaging cost
and 2/3 (two thirds) of the variable selling and administration costs can be saved. In addition to
the above, there is 10% material lost in process, which is unavoidable.
____________________________________________________________________________
REQUIRED
Based on the facts given in above case:
QUESTION ONE
a) Identify the Retail Divisions business mission as per BCG model.
b) Identify the means of competitive advantage and list two key success factors of the Retail
Divisions strategy.
c) Discuss the type of organisational structure DLCC should have considering it now has
two divisions. Give one advantage and one disadvantage of this type of structure. In your
answer you must refer to the type of work units and justify your choice.
d) Identify one performance measure that can be used for each perspective of the balanced
score card of the Retail division.
(2+3+3+4=12 marks)
QUESTION TWO
a) Discuss two reasons why it is necessary for DLCC to determine a transfer price for
processed coffee.
b) Explain in detail why transfer pricing may become a problem at DLCC. In your answer
refer to the three factors that create the transfer pricing problem.
ACCT2195, Final Examination Semester 3, 2013 (Vietnam)
Page 3
(2 + 4 = 6 marks)
QUESTION THREE
Based on the scenario given in the case and existing capacity utilisation levels, answer the
following:
a) From the perspective of Dak Lak Coffee Company, determine the optimal sourcing
decision for processed coffee. You must explain your answer fully. Marks will be
awarded for complete and properly labelled calculations to support your answer. State
any assumptions you make.
b) The Processing Divisions manager has submitted the bid for processed coffee at $15 per
kilogram as this is the current market price. Given your answer to question 3 a), do you
believe this is an appropriate transfer price? Explain your answer fully. In your answer
you must refer to:
The behaviours that are likely to occur if this transfer price is used;
c) Recommend an appropriate transfer trice. Justify your choice of transfer price. In your
answer you must refer to the following:
The minimum and maximum transfer prices that the Processing Division could
offer, which would still lead to the optimal sourcing decision (you must explain
why these are minimum and maximum transfer prices);
The behaviours that are likely to occur if this transfer price is used;
QUESTION FOUR
The Processing Division has been operating for several months and sales of its processed coffee
on the external market have been growing at such a rate that it has no spare capacity to satisfy
the Retail Divisions demand for processed coffee in the foreseeable future.
In light of these changed circumstances, from the perspective of DLCC Company, determine the
optimal sourcing decision for the processed coffee. You must explain your answer fully. Marks
will be awarded for complete and properly labelled calculations to support your answer. State
any assumptions you make.
(6 marks)
Page 4