Question : 51) ______ A) market pricing. B) single pricing. C) prorated transfer pricing. D) competition pricing : 1196207

 

51)

______ A)

market pricing. B)

single pricing. C)

prorated transfer pricing. D)

competition pricing E)

dual pricing.

52)

The Transportation Division of Petrolia Paint Company can purchase paint from an independent producer at$18 per litre. The company has three divisions: Production, Transportation, and Paint. The company’s Transportation Division is currently buying paint from the Paint Division for$24 per litre. Transfer prices are based on 125 percent of full cost. The market-based transfer price per litre is$12.60. Which of the following would NOT occur if the company uses dual pricing to record the Transportation Division purchases of paint from the Paint Division? 52)

______ A)

credit the Paint Division for $12.60 B)

debit the corporate account for $9.90 C)

credit the Paint Division for $22.50 D)

credit the Paint Division for $32.40 E)

debit the Transportation Division for $12.60

Use the information below to answer the following question(s).

 

Soft Cushion Company is highly decentralized. Each division is empowered to make its own sales decisions. The Assembly Division can purchase a key component-stuffing-from the Production Division or from external suppliers. The Production Division has been the major supplier of stuffing in recent years. The Assembly Division has announced that two external suppliers will be used to purchase the stuffing at $20 per kilogram for the next year. The Production Division recently increased its unit price to $40. The manager of the Production Division presented the following information; variable cost $32, fixed cost $8, to top management in order to attempt to force the Assembly Division to purchase the stuffing internally. The Assembly Division purchases 20,000 kgs. per month.

53)

The Production Division has no alternative use for the facilities used to manufacture the stuffing. What is the monthly operating income advantage (disadvantage) if the goods are purchased internally? 53)

______ A)

$400,000 B)

$(240,000) C)

$(400,000) D)

$640,000 E)

$240,000

54)

What is the monthly operating advantage (disadvantage) of purchasing the goods internally assuming the Production Division is able to utilize the facilities for other operations resulting in monthly cash-operating savings of$40,000? 54)

______ A)

$(400,000) B)

$400,000 C)

$(240,000) D)

$40,000 E)

$(280,000)

55)

What would be the monthly operating advantage (disadvantage) of purchasing the goods internally assuming the external supplier increased its price to$50 per kilogram and the Production Division is able to utilize facilities for other operations, resulting in a monthly cash-operating savings of $30 per kilogram? 55)

______ A)

$(640,000) B)

$(240,000) C)

$360,000 D)

$(400,000) E)

$1,000,000

56)

A transfer price set at full cost without a markup will achieve goal congruence if 56)

______ A)

the seller is a cost centre and the purchaser is a profit centre. B)

the seller is a profit centre and the purchaser is a revenue centre. C)

both units are profit centres. D)

both units are cost centres. E)

the seller is a profit centre and the purchaser is a cost centre.

57)

The objectives of setting transfer prices include 57)

______ A)

subunit autonomy. B)

goal congruence. C)

maximizing the selling subunit’s income. D)

goal congruence and subunit autonomy. E)

minimizing the purchasing subunit’s costs.

58)

In analyzing transfer prices 58)

______ A)

the buyer will not pay the incremental costs. B)

the buyer will not willingly purchase a product for less than the incremental costs incurred to manufacture the product internally. C)

the buyer will willingly pay more than the ceiling transfer price. D)

the buyer will not pay less than the ceiling transfer price. E)

the seller should not sell a product for less than the incremental costs incurred to make the product.

59)

Cash outflows that are directly associated with the production and transfer of the products and services are called 59)

______ A)

transfer costs. B)

outlay costs. C)

opportunity costs. D)

variable costs. E)

additional costs.

60)

The profit foregone by the seller if the products or services are transferred internally instead of selling them externally are called 60)

______ A)

additional costs. B)

transfer costs. C)

opportunity costs. D)

outlay costs. E)

variable costs.

61)

The seller of product A has no idle capacity and can sell all it can produce at$20 per unit. Outlay cost is$4. What is the opportunity cost assuming the seller sells internally?