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CONFIDENTIAL 2 QUESTION 1 (12 marks; 21.6 minutes) Noble Company has two divisions, the Domestic Division and the International Division. Last year, the Domestic Division earned R360 000 using average operating assets of R1 440 000 Sales for the Domestic Division were R3 600 000. Last year, the International Division earned R560 000 using average operating assets of R2 800 000. Sales for the International Division were R7 000 000 Required: 1.1 For the Domestic Division, margin is b and ROI is a Turnover is (5) 1.2 Foe the International Division, margin b and ROI is is Turnover is (5) 1.3 If these are the only two divisions of Noble Company, calculate the ROI for Noble Company (2) QUESTION 2 (4 marks; 7.2 minutes) Paige Inc. has a division that makes paint and another division that constructs houses. The paint division incurs the following costs for one litre of paint: Direct materials Direct labour Variable overhead Fixed overhead Total R1.10 R1.45 R0.90 R1.15 R4.60 The Paint Division can make 1 000 000 litres per year, and is operating at capacity. The Construction Division currently buys paint from an outside supplier for R5.20 per litre (the same price that the Paint Division receives), Required: 2.1 Calculate the maximum transfer price per litre of paint. This price is set by which of the two divisions? (2) 2.2 Calculate the minimum transfer price per litre of paint. This price is set by which if the two divisions? (2) CONFIDENTIAL

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