Question 1

Which of the following is not a benefit of decentralization?

Accepted Answer

A) Creates greater responsiveness to the needs of a subunit's customers,suppliers,and employees. 
B) Leads to gains from faster decision making by subunit managers. 
C) Increases motivation of subunit managers. 
D) Lacks the ability to help management development learning in organizations. 
E) Sharpens the focus of subunit managers,broadens the reach of top management. 
A) Creates greater responsiveness to the needs of a subunit's customers,suppliers,and employees. 
B) Leads to gains from faster decision making by subunit managers. 
C) Increases motivation of subunit managers. 
D) Lacks the ability to help management development learning in organizations. 
E) Sharpens the focus of subunit managers,broadens the reach of top management.

Question 2

Which transfer-pricing method's market may not exist,or may be imperfect or in distress?

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 3

How do managers use information to design management control systems?

Accepted Answer

Managers use information both from withi

Question 4

Which of the following methods includes a markup,or profit margin,that represents a return on subunit investment?

Accepted Answer

A) Market-based transfer prices. 
B) Cost-based transfer prices. 
C) Hybrid transfer prices. 
D) Segment-based transfer prices. 
E) Demographic-based transfer prices. 
A) Market-based transfer prices. 
B) Cost-based transfer prices. 
C) Hybrid transfer prices. 
D) Segment-based transfer prices. 
E) Demographic-based transfer prices.

Question 5

Some companies design their management control system around the concept of the balanced scorecard.

Accepted Answer

A) True 
 B)False

Question 6

In markets that are not perfectly competitive,companies can increase capacity utilization only by decreasing prices.

Accepted Answer

A) True 
 B)False

Question 7

Gravel and Sand Corporation has two divisions,Refining and Production.The company's primary product is Quick-dry Cement Mix.Each division's costs are provided below:
 
The Refining Division has been operating at a capacity of 42,000 bags a day and usually purchases 25,750 from the Production Division and 16,250 bags of cement mix from other suppliers at $62 per bag.
Required
Based on the provided information,what is the transfer price per bag from the Production Division to the Refining Division,assuming the method used to place a value on each bag of cement mix is 190% of variable costs? Compute the transfer price per bag from the Production Division to the Refining Division,assuming the method used to place a value on each bag of cement mix is 115% of full costs.Assume 230 bags are transformed from the Production Division to the Refining Division for a transfer price of $20 per bag.The Refining Division sells the 230 bags at a price of $105 each to customers.What is the operating income of both divisions together?

Accepted Answer

A) $20.90;$20.70;$6,670 
B) $21.90;$21.70;$6,675 
C) $21.95;$21.75;$6,670 
D) $22.05;$21.80;$6,675 
E) $22.10;$21.85;$6,680 
A) $20.90;$20.70;$6,670 
B) $21.90;$21.70;$6,675 
C) $21.95;$21.75;$6,670 
D) $22.05;$21.80;$6,675 
E) $22.10;$21.85;$6,680

Question 8

Which of the cost scenarios listed below would managers choose to use when they do not consider full costs in cost-based transfer methods?

Accepted Answer

A) R&D. 
B) Payroll. 
C) Distribution. 
D) Design marketing. 
E) Customer service. 
A) R&D. 
B) Payroll. 
C) Distribution. 
D) Design marketing. 
E) Customer service.

Question 9

Which of the following is not true about effective management control?

Accepted Answer

A) Closely aligned with organization's goals. 
B) Closely aligned with organization's strategies. 
C) Management control systems reinforce goals. 
D) Designed to support organizational responsibilities of individual managers. 
E) Effective management control systems do not motivate managers and other employees. 
A) Closely aligned with organization's goals. 
B) Closely aligned with organization's strategies. 
C) Management control systems reinforce goals. 
D) Designed to support organizational responsibilities of individual managers. 
E) Effective management control systems do not motivate managers and other employees.

Question 10

Dual pricing is not widely used in practice even though it reduces the goal congruence associated with a pure cost-based transfer-pricing method.

Accepted Answer

A) True 
 B)False

Question 11

Decentralization speeds decision making,creating a competitive advantage over centralized organizations.

Accepted Answer

A) True 
 B)False

Question 12

Transfer prices based on full cost can lead to ________.

Accepted Answer

A) no decisions 
B) optimal decisions 
C) primary decisions 
D) contingent decisions 
E) suboptimal decisions 
A) no decisions 
B) optimal decisions 
C) primary decisions 
D) contingent decisions 
E) suboptimal decisions

Question 13

Which of the following is not true about Section 482 of the U.S.Internal Revenue code?

Accepted Answer

A) The code governs taxation of multinational transfer pricing. 
B) Requirements include transfer prices between companies in United States only. 
C) Requirements include transfer prices between a company and it's foreign or subsidiary. 
D) Regulations related to the code recognize that transfer prices can be market-based,or cost-plus-based. 
E) The cost-plus-based pricing represents margins on comparable transactions. 
A) The code governs taxation of multinational transfer pricing. 
B) Requirements include transfer prices between companies in United States only. 
C) Requirements include transfer prices between a company and it's foreign or subsidiary. 
D) Regulations related to the code recognize that transfer prices can be market-based,or cost-plus-based. 
E) The cost-plus-based pricing represents margins on comparable transactions.

Question 14

In the ________ method,the eventual transfer price results from a bargaining process between the selling and buying subunits.

Accepted Answer

A) negotiated pricing 
B) negotiated buying 
C) negotiated purchasing 
D) negotiated distribution 
E) negotiated parallelism 
A) negotiated pricing 
B) negotiated buying 
C) negotiated purchasing 
D) negotiated distribution 
E) negotiated parallelism

Question 15

The managerial accountant at Mega Petroleum reported the following information.Recall that 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.The market price per barrel of gasoline sold to external parties is $180.
 
Required
Compute Mega Petroleum's total operating income from purchasing,transporting,and refining 100 barrels of crude oil and selling the 50 barrels of gasoline.

Accepted Answer

A) $50 
B) $65 
C) $75 
D) $95 
E) $100 
A) $50 
B) $65 
C) $75 
D) $95 
E) $100

Question 16

The manager is accountable for cost only in which of the following responsibility centers?

Accepted Answer

A) Cost Center. 
B) Clinic Center. 
C) Profit Center. 
D) Revenue Center. 
E) Investment Center. 
A) Cost Center. 
B) Clinic Center. 
C) Profit Center. 
D) Revenue Center. 
E) Investment Center.

Question 17

Can a manager directly reward and observe effort?

Accepted Answer

No,the manager cannot directly

Question 18

Which of the following is not true about the formal management control system?

Accepted Answer

A) Includes procedures. 
B) Includes explicit rules. 
C) Includes shared values. 
D) Includes incentive plans. 
E) Includes performance measures. 
A) Includes procedures. 
B) Includes explicit rules. 
C) Includes shared values. 
D) Includes incentive plans. 
E) Includes performance measures.

Question 19

Deciding whether a current market price is a distress price is often difficult.

Accepted Answer

A) True 
 B)False

Question 20

Surveys of U.S.and European companies report that the decisions made most frequently at the decentralized level are related to product mix and product advertising.

Accepted Answer

A) True 
 B)False

Which of the following is not a benefit of decentralization?

Which transfer-pricing method's market may not exist,or may be imperfect or in distress?

How do managers use information to design management control systems?

Which of the following methods includes a markup,or profit margin,that represents a return on subunit investment?

Some companies design their management control system around the concept of the balanced scorecard.

In markets that are not perfectly competitive,companies can increase capacity utilization only by decreasing prices.

Which of the cost scenarios listed below would managers choose to use when they do not consider full costs in cost-based transfer methods?

Which of the following is not true about effective management control?

Dual pricing is not widely used in practice even though it reduces the goal congruence associated with a pure cost-based transfer-pricing method.

Decentralization speeds decision making,creating a competitive advantage over centralized organizations.

Transfer prices based on full cost can lead to ________.

Which of the following is not true about Section 482 of the U.S.Internal Revenue code?

In the ________ method,the eventual transfer price results from a bargaining process between the selling and buying subunits.

The manager is accountable for cost only in which of the following responsibility centers?

Can a manager directly reward and observe effort?

Which of the following is not true about the formal management control system?

Deciding whether a current market price is a distress price is often difficult.

Surveys of U.S.and European companies report that the decisions made most frequently at the decentralized level are related to product mix and product advertising.

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

Which of the following is not a benefit of decentralization?

Which transfer-pricing method's market may not exist,or may be imperfect or in distress?

How do managers use information to design management control systems?

Which of the following methods includes a markup,or profit margin,that represents a return on subunit investment?

Some companies design their management control system around the concept of the balanced scorecard.

In markets that are not perfectly competitive,companies can increase capacity utilization only by decreasing prices.

Which of the cost scenarios listed below would managers choose to use when they do not consider full costs in cost-based transfer methods?

Which of the following is not true about effective management control?

Dual pricing is not widely used in practice even though it reduces the goal congruence associated with a pure cost-based transfer-pricing method.

Decentralization speeds decision making,creating a competitive advantage over centralized organizations.

Transfer prices based on full cost can lead to ________.

Which of the following is not true about Section 482 of the U.S.Internal Revenue code?

In the ________ method,the eventual transfer price results from a bargaining process between the selling and buying subunits.

The manager is accountable for cost only in which of the following responsibility centers?

Can a manager directly reward and observe effort?

Which of the following is not true about the formal management control system?

Deciding whether a current market price is a distress price is often difficult.

Surveys of U.S.and European companies report that the decisions made most frequently at the decentralized level are related to product mix and product advertising.

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