Question : 71. Assuming an outside market exists, the maximum transfer price a : 1295685

Economics

71. Assuming an outside market exists, the maximum transfer price a selling division should charge a buying division should be: A. the variable costs of producing and selling the product.B. the fixed costs of producing and selling the product.C. the market price.D. the market price plus the contribution margin lost on outside sales.

72. The minimum transfer price a selling division should charge a buying division should be: A. the variable costs of producing and selling the product.B. the fixed costs of producing and selling the product.C. the market price.D. the variable costs of producing and selling the product minus the contribution margin lost on outside sales.

73. Which of the following statements regarding transfer pricing is false? A. A key concept in transfer pricing is that no matter the individual desires of division managers, the transfer price that provides the most benefit to the company as a whole is the one that should be chosen.B. The selling division should never try to make a profit from selling to a different division within the same company.C. The focus of transfer pricing when international divisions are involved centers on minimizing taxes, duties, and foreign currency exchange risks.D. Determining whether or not there is an outside market for the product is an important consideration when determining a transfer price.

74. Shane Products manufactures and sells sportswear and sports equipment. The apparel division incurs the following costs for the production of a single t-shirt when 6,000 shirts are produced each year:

Direct materials

$1.25

Direct labor

1.00

Variable overhead

.75

Fixed overhead

.50

Total cost

$3.50

The company sells the t-shirts to retail stores for $7.50. The sports equipment division is doing a promotion whereby each customer that purchases a tennis racket during the month of May receives a free t-shirt. The sports equipment division would like to purchase these shirts from the t-shirt division. Refer to the Shane Products information above. Assuming the t-shirt division has excess capacity and there would be no contribution margin lost on outside sales if they sell to the sports equipment division, the minimum transfer price that should be charged is: A. $7.50B. $7.00C. $3.50D. $3.00

75. Shane Products manufactures and sells sportswear and sports equipment. The apparel division incurs the following costs for the production of a single t-shirt when 6,000 shirts are produced each year:

Direct materials

$1.25

Direct labor

1.00

Variable overhead

.75

Fixed overhead

.50

Total cost

$3.50

The company sells the t-shirts to retail stores for $7.50. The sports equipment division is doing a promotion whereby each customer that purchases a tennis racket during the month of May receives a free t-shirt. The sports equipment division would like to purchase these shirts from the t-shirt division. Refer to the Shane Products information above. Assuming the t-shirt division is at full capacity, what price should they charge such that no additional losses will be incurred if they sell the shirts to the sports equipment division? A. $3.50B. $7.50C. $3.00D. $4.00

76. Pearson Inc. produces and sells a variety of household cleaning supplies and equipment including vacuum cleaners and carpet cleaner both of which are sold separately in stores. The carpet cleaning division incurs the following costs for the production of a single bottle of carpet cleaner when 600,000 bottles are produced each year:

Direct materials

$1.30

Direct labor

.50

Variable overhead

.25

Fixed overhead

.30

Total cost

$2.35

The company sells the bottles to retail stores for $5.00 per bottle. The vacuum division is doing a promotion whereby each customer that purchases a vacuum cleaner during the month of December receives a free bottle of carpet cleaner. The vacuum division would like to purchase these bottles from the carpet cleaning division. Refer to the Pearson Inc. information above. Assuming the carpet cleaning division has excess capacity and there would be no contribution margin lost on outside sales if they sell to the vacuum division, the minimum transfer price that should be charged is: A. $2.05B. $2.35C. $5.00D. $2.65

77. Pearson Inc. produces and sells a variety of household cleaning supplies and equipment including vacuum cleaners and carpet cleaner both of which are sold separately in stores. The carpet cleaning division incurs the following costs for the production of a single bottle of carpet cleaner when 600,000 bottles are produced each year:

Direct materials

$1.30

Direct labor

.50

Variable overhead

.25

Fixed overhead

.30

Total cost

$2.35

The company sells the bottles to retail stores for $5.00 per bottle. The vacuum division is doing a promotion whereby each customer that purchases a vacuum cleaner during the month of December receives a free bottle of carpet cleaner. The vacuum division would like to purchase these bottles from the carpet cleaning division. Refer to the Pearson Inc. information above. Assuming the carpet cleaning division is at full capacity, what price should they charge such that no additional losses will be incurred if they sell the bottles to the vacuum division? A. $2.05B. $2.35C. $5.00D. $2.65

78. The Green Division can sell its products to an outside market for $20 per unit. The division’s variable manufacturing costs are $7 per unit, and fixed manufacturing costs are $2 per unit. If the division is operating at full capacity, the opportunity cost of transferring units internally at the minimum transfer price is: A. $20B. $11C. $13D. $ 9

79. The Automotive Division can sell one of its products to an outside market for $55 per unit. The division’s variable manufacturing costs are $14 per unit, and fixed manufacturing costs are $6 per unit. If the division is operating at full capacity, the opportunity cost of transferring units internally at the minimum transfer price is: A. $41B. $55C. $35D. $20

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July 1, 2023

61.When there is a shortage in a market, prices are likely to:

A. Fall because buyers do not wish to buy as much as sellers want to sell.

B. Rise because some buyers will offer to pay a higher price.

C. Fall because sellers are likely to reduce their production if prices rise.

D. Rise because the government will put a price ceiling in place.

62.If a market shortage exists:

A. The invisible hand will work to reduce the price.

B. The only solution is for the government to raise the price.

C. Producers will compete for customers by reducing prices.

D. Consumers will compete for the product by offering to pay more.

63.A market surplus occurs when:

A. People cannot buy the amount of goods and services that they are willing and able to buy.

B. The price is less than the equilibrium price.

C. The quantity supplied exceeds the quantity demanded at a given price.

D. There is a price ceiling.

64.When there is a surplus in a market, prices are likely to fall because:

A. Buyers do not wish to buy as much as sellers want to sell.

B. Some buyers will offer to pay a higher price, initiating a move up the supply curve.

C. Sellers are likely to increase their production.

D. Buyers will wait for the government to establish a price floor.

65.If a market surplus exists:

A. The only resolution is for the government to set the price.

B. Consumers will compete for the product buy offering to pay more.

C. Producers will compete for customers by reducing prices.

D. The equilibrium price is equal to the price ceiling.

66.If demand is constant, a decrease in the supply of gasoline will cause the equilibrium price:

A. To rise and quantity to fall.

B. And quantity both to rise.

C. To fall and quantity to rise.

D. And quantity both to fall.

67.If demand is constant, a leftward shift in the supply curve will result in:

A. A decrease in equilibrium quantity and a lower equilibrium price.

B. An increase in equilibrium quantity and a lower equilibrium price.

C. A decrease in equilibrium quantity and a higher equilibrium price.

D. An increase in equilibrium quantity and a higher equilibrium price.

68.The price of chocolate candy bars rises. This could be due to:

A. A decrease in the wage rate paid to workers in the candy bar factories.

B. A decrease in the cost of chocolate, which is used to produce candy bars.

C. A subsidy by the federal government for the producers of chocolate candy bars.

D. A decrease in the number of chocolate candy bar producers.

69.If demand is unchanged, a rightward shift in the supply curve for plasma TVs will cause:

A. A decrease in equilibrium quantity and a higher equilibrium price.

B. An increase in equilibrium quantity and a higher equilibrium price.

C. An increase in equilibrium quantity and a lower equilibrium price.

D. A decrease in equilibrium quantity and a lower equilibrium price.

70.Which of the following would cause a decrease in the price of automobiles?

A. A technological advance in automobile manufacturing.

B. An increase in the wages paid to automobile assembly line workers.

C. A decrease in the cost of gasoline.

D. An increase in the number of buyers.