ACCOUNTING CONTROL

REQUIRED:
(a) Produce a three-page PowerPoint presentation to incorporate the following tasks:
(i) SLIDE 1
Using Excel, produce a profit statement for each division detailing sales and costs, separating external sales and inter-divisional transfers. You are advised to produce this statement in an Excel spreadsheet first and then copy this information into the PowerPoint slide
(ii) SLIDE 2
Using Excel, calculate the ROI for division D1 and division D2. Copy this information into Slide 2 of the PowerPoint presentation
(iii) SLIDE 3
Provide a brief commentary on the division listed profit statements and ROI results shown in slides 1 and 2.

(b) The directors of CLUK are planning to expand the operations of the company and together with the divisional managers, have agreed to purchase a new machine that would increase annual production capacity to 50,000,000 cans at Division D1.

The purchase of this machine will increase the net assets of Division D1 by $500,000. Assume that there is no impact on unit variable costs or fixed costs resulting from this purchase. Inter-divisional transfers will be priced at opportunity cost.

You are required to produce a report to the directors critically discussing the issues and implications of the Transfer Pricing Policy on this investment and divisional profits. You should support your answer with suitable analysis and revised profit statements (these should be included as appendices to your report). Your report should be produced in a Word document containing no more than 1,000 words (+/- 10%).

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