Question 1

In a well-designed transfer-pricing system,a manager focuses on minimizing subunit performance.

Accepted Answer

A) True 
 B)False

Question 2

In competitive markets,it is efficient to set the transfer prices ________ to the market price of the intermediate goods.

Accepted Answer

A) equal 
B) below 
C) above 
D) separate 
E) different 
A) equal 
B) below 
C) above 
D) separate 
E) different

Question 3

When subunits work together,top management uses ________ to coordinate the actions of the subunits and to evaluate the performance of their managers.

Accepted Answer

A) transfer prices 
B) single unit cost 
C) dual pricing 
D) multiple unit costs 
E) hybrid pricing 
A) transfer prices 
B) single unit cost 
C) dual pricing 
D) multiple unit costs 
E) hybrid pricing

Question 4

Which transfer-pricing method is useful for evaluating subunit performance,but transfer prices are affected by bargaining strengths of the buying and selling divisions?

Accepted Answer

A) Cost-based. 
B) Negotiated. 
C) Market-based. 
D) Minimum-based. 
E) Maximum-based. 
A) Cost-based. 
B) Negotiated. 
C) Market-based. 
D) Minimum-based. 
E) Maximum-based.

Question 5

In practice,many companies use transfer prices based on ________.

Accepted Answer

A) semi-cost 
B) full-cost 
C) part-cost 
D) half-cost 
E) partial-cost 
A) semi-cost 
B) full-cost 
C) part-cost 
D) half-cost 
E) partial-cost

Question 6

Which of the following is not considered criteria used by managers to evaluate transfer prices?

Accepted Answer

A) Promotes goal congruence. 
B) Induces managers to exert a high level of effort. 
C) Helps top management evaluate the performance of individual subunits. 
D) Preserves a high degree of subunit autonomy in decision making if top management favors a high degree of decentralization. 
E) Subunits selling a product of service should not be motivated to hold down their costs. 
A) Promotes goal congruence. 
B) Induces managers to exert a high level of effort. 
C) Helps top management evaluate the performance of individual subunits. 
D) Preserves a high degree of subunit autonomy in decision making if top management favors a high degree of decentralization. 
E) Subunits selling a product of service should not be motivated to hold down their costs.

Question 7

With a well-designed transfer price,each divisional manager makes the best decision for his or her subunit,while simultaneously ________ the profits of the firm.

Accepted Answer

A) prohibiting 
B) eliminating 
C) maximizing 
D) minimizing 
E) distributing 
A) prohibiting 
B) eliminating 
C) maximizing 
D) minimizing 
E) distributing

Question 8

The imperfect competition is illustrated in a downward-sloping curve for the ________ product.

Accepted Answer

A) end 
B) normal 
C) primary 
D) beginning 
E) intermediate 
A) end 
B) normal 
C) primary 
D) beginning 
E) intermediate

Question 9

Why do managers distinguish incremental cost from opportunity cost?

Accepted Answer

Managers distinguish increment

Question 10

Which of the following is the extent to which managers strive or endeavor to achieve a goal?

Accepted Answer

A) Effort. 
B) Esteem. 
C) Development. 
D) Determination. 
E) Goal congruence. 
A) Effort. 
B) Esteem. 
C) Development. 
D) Determination. 
E) Goal congruence.

Question 11

Mega Petroleum has two divisions,each operating as a profit center.The transportation division purchases crude oil in Venezuela,and transports it from Venezuela to Chicago,Illinois.The reefing division process crude oil into gasoline.The cost-based transfer price is 106% of full cost.The contract price of $75 per barrel of crude oil is based on market price in Chicago.The market price per barrel of crude oil supplied to the refining division is $90.The managerial accountant reported the following information?
 
Required
Compute the cost-based transfer prices at 106% of full cost of the crude oil purchased in Venezuela,plus the transportation division's variable and fixed costs.

Accepted Answer

A) $80.86 
B) $82.86 
C) $85.86 
D) $87.86 
E) $90.86 
A) $80.86 
B) $82.86 
C) $85.86 
D) $87.86 
E) $90.86

Question 12

Which of the following is true about the informal management control system?

Accepted Answer

A) Includes procedures. 
B) Includes explicit rules. 
C) Includes incentive plans. 
D) Includes company culture. 
E) Includes performance measures. 
A) Includes procedures. 
B) Includes explicit rules. 
C) Includes incentive plans. 
D) Includes company culture. 
E) Includes performance measures.

Question 13

How do managers reduce excessive focus of subunit managers on their own subunits?

Accepted Answer

To reduce the excessive focus

Question 14

What is the rationale of transfer prices?

Accepted Answer

When subunit managers make dec

Question 15

Which of the following is the product or service transferred between subunits of an organization?

Accepted Answer

A) Unit product. 
B) Internal product. 
C) External product. 
D) Subordinate product. 
E) Intermediate product. 
A) Unit product. 
B) Internal product. 
C) External product. 
D) Subordinate product. 
E) Intermediate product.

Question 16

________ pricing uses two separate transfer-pricing methods to price each transfer from one subunit to another.

Accepted Answer

A) Dual 
B) Prorated 
C) Minimum 
D) Maximum 
E) Negotiated 
A) Dual 
B) Prorated 
C) Minimum 
D) Maximum 
E) Negotiated

Question 17

The managerial accountant at International Solutions sells crude oil and it was reported that the company operates in the United States and Mexico.What are some of the tax issues could conflict with other objectives top management hopes to achieve via transfer pricing?

Accepted Answer

The transfer price could be very costly

Question 18

How can managers use information technology to enhance decentralized decision making in multinational corporations?

Accepted Answer

Managers use and design their

Question 19

Transfer prices affect only income taxes.

Accepted Answer

A) True 
 B)False

Question 20

________ products or services at market prices generally lead to optimal decisions when the market for the intermediated product is perfectly competitive.

Accepted Answer

A) Creating 
B) Evaluating 
C) Comparing 
D) Determining 
E) Transferring 
A) Creating 
B) Evaluating 
C) Comparing 
D) Determining 
E) Transferring

In a well-designed transfer-pricing system,a manager focuses on minimizing subunit performance.

In competitive markets,it is efficient to set the transfer prices ________ to the market price of the intermediate goods.

When subunits work together,top management uses ________ to coordinate the actions of the subunits and to evaluate the performance of their managers.

Which transfer-pricing method is useful for evaluating subunit performance,but transfer prices are affected by bargaining strengths of the buying and selling divisions?

In practice,many companies use transfer prices based on ________.

Which of the following is not considered criteria used by managers to evaluate transfer prices?

With a well-designed transfer price,each divisional manager makes the best decision for his or her subunit,while simultaneously ________ the profits of the firm.

The imperfect competition is illustrated in a downward-sloping curve for the ________ product.

Why do managers distinguish incremental cost from opportunity cost?

Which of the following is the extent to which managers strive or endeavor to achieve a goal?

Which of the following is true about the informal management control system?

How do managers reduce excessive focus of subunit managers on their own subunits?

What is the rationale of transfer prices?

Which of the following is the product or service transferred between subunits of an organization?

________ pricing uses two separate transfer-pricing methods to price each transfer from one subunit to another.

The managerial accountant at International Solutions sells crude oil and it was reported that the company operates in the United States and Mexico.What are some of the tax issues could conflict with other objectives top management hopes to achieve via transfer pricing?

How can managers use information technology to enhance decentralized decision making in multinational corporations?

Transfer prices affect only income taxes.

________ products or services at market prices generally lead to optimal decisions when the market for the intermediated product is perfectly competitive.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Process Costing and Cost Allocation

Activity-Based Costing and Activity-Based Management

Pricing Decisions, customer Profitability, and Cost Management

Determining How Costs Behave

Decision Making and Relevant Information

Quality, inventory Management, and Time

Capital Investments

Master Budget and Responsibility Accounting

Flexible Budgets, cost Variances, and Management Control

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Performance Measurement and Compensation

Filters

Exam 15: Transfer Pricing

In a well-designed transfer-pricing system,a manager focuses on minimizing subunit performance.

In competitive markets,it is efficient to set the transfer prices ________ to the market price of the intermediate goods.

When subunits work together,top management uses ________ to coordinate the actions of the subunits and to evaluate the performance of their managers.

Which transfer-pricing method is useful for evaluating subunit performance,but transfer prices are affected by bargaining strengths of the buying and selling divisions?

In practice,many companies use transfer prices based on ________.

Which of the following is not considered criteria used by managers to evaluate transfer prices?

With a well-designed transfer price,each divisional manager makes the best decision for his or her subunit,while simultaneously ________ the profits of the firm.

The imperfect competition is illustrated in a downward-sloping curve for the ________ product.

Why do managers distinguish incremental cost from opportunity cost?

Which of the following is the extent to which managers strive or endeavor to achieve a goal?

Which of the following is true about the informal management control system?

How do managers reduce excessive focus of subunit managers on their own subunits?

What is the rationale of transfer prices?

Which of the following is the product or service transferred between subunits of an organization?

________ pricing uses two separate transfer-pricing methods to price each transfer from one subunit to another.

The managerial accountant at International Solutions sells crude oil and it was reported that the company operates in the United States and Mexico.What are some of the tax issues could conflict with other objectives top management hopes to achieve via transfer pricing?

How can managers use information technology to enhance decentralized decision making in multinational corporations?

Transfer prices affect only income taxes.

________ products or services at market prices generally lead to optimal decisions when the market for the intermediated product is perfectly competitive.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Process Costing and Cost Allocation

Activity-Based Costing and Activity-Based Management

Pricing Decisions, customer Profitability, and Cost Management

Determining How Costs Behave

Decision Making and Relevant Information

Quality, inventory Management, and Time

Capital Investments

Master Budget and Responsibility Accounting

Flexible Budgets, cost Variances, and Management Control

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Performance Measurement and Compensation

Filters