Barossa Bicycle Company Makes Bicycles Required:
Calculate the Operating Profit for Each Division and the and the Assembly

question 28

Essay

Barossa Bicycle Company makes bicycles.The Frame Division manufactures the frames and the Assembly Division makes the finished bicycles.The frames can be sold separately for $500.The bicycles sell for $750.The information related to manufacturing for 2017 is as follows:
$$\begin{array} { | l | r | } \hline \text { Frame Division manufacturing costs } & \$ 12000000 \\\hline \text { Sales of frames by Frame Division } & 8000000 \\\hline \text { Market value of frames transferred to Assembly } & 12000000 \\\hline \text { Sales of bicycles by Assembly Division } & 14400000 \\\hline \text { Additional manufacturing costs of Assembly Division } & 3000000 \\\hline\end{array}$$
Required:
Calculate the operating profit for each division and the company as a whole.Use market value as the transfer price.Will all of the managers be happy with this concept? Explain.
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Definitions:

Dementia

A category of brain diseases that cause long term and often gradual decrease in the ability to think and remember, affecting daily functioning.

Cognitive Impairment

Difficulty with cognitive functions such as thinking, remembering, and reasoning to a degree that impacts daily life.

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The management, creation, and study of money, banking, credit, investments, assets, and liabilities.

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