QUESTION
MARK
Mabusi Inc. consist of two divisions, Division A and Division B Division A is operating at capacity, while Division B is operating at full capacity hours
Division B produces two products, Wiki and Tiki. Both products use the same labourers. They are planning to produce Tiki with the remaining eapacity applied to Wiki for the coming year. Direct costs are as follows:
tableWiki $ per Tiki N per MaterialLabour hour minules
Overheads amount to $ per annum and are alloeated on labour hours. At full capacity, $ of the overheads are variable. Division B determines selling price by adding to total cost. During the coming year, Division A wants convert Wilk to obtain a product called Smoots. Smoots sells at $ per
Conversion costs for Smoots amount to $ per Division As flxed cesis will remain unchanged, while the variable overhead costs will increase with No per kg If Bivision B transfers products to Division A packaging costs of $ will be saved.
tableREQUIRED:MARKEAdvise the company if the transfer of Wiki from Division B to Division Afor further conversion should take place.,
