Question : 7) In markets that not perfectly competitive, ________. A) the selling : 1212007

 

7) In markets that are not perfectly competitive, ________.

A) the selling division will not have any unused capacity

B) companies can increase their capacity utilization only by decreasing their prices

C) minimum transfer price will equal the incremental cost per unit incurred up to the point of transfer

D) the opportunity cost will equal the minimum contribution margin

8) In analyzing transfer prices, the ________.

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

B) seller will not willingly sell a product for less than the incremental costs incurred to make the product

C) buyer will willingly pay more than the ceiling transfer price

D) buyer will not pay less than the ceiling transfer price

 

9) Minimum transfer price can be arrived at by adding incremental cost per unit incurred up to the point of transfer with the markup required.

 

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

 

11) The additional cost of producing and transferring the product or service is called variable manufacturing cost.

 

12) If the selling subunit is operating at capacity, the opportunity cost of transferring a unit internally rather than selling it externally is equal to the market price minus the variable cost.

13) The Fabrication Division of American Car Company has offered to purchase 90,000 batteries from the Electrical Division for $104 per unit. At a normal volume of 250,000 batteries per year, production costs per battery are as follows:

 

Direct materials

$ 40

Direct manufacturing labor

30

Variable factory overhead

12

Fixed factory overhead

40

   Total

$112

 

The Electrical Division has been selling 250,000 batteries per year to outside buyers at $136 each; capacity is 350,000 batteries per year. The Fabrication Division has been buying batteries from outside sources for $130 each.

 

Required:

a.Should the Electrical Division manager accept the offer? Explain.

b.From the company’s perspective, will the internal sales be of any benefit? Explain.

Objective 22.9

 

1) Soft Cushion Company is highly decentralized. Each division is empowered to make its own sales decisions. The Assembly Division can purchase stuffing, a key component, 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 pound 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 and 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 pounds of stuffing per month.

 

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

A) $1,000,000

B) $360,000

C) $(240,000)

D) $(400,000)

 

2) One of the problems in using one set of accounting records for tax reporting and another set of records for internal management reporting is that ________.

A) it is illegal as well as unethical to do so

B) the tax authorities may suspect manipulation of records

C) it is almost impossible to keep the records straight and hard to reconcile the books

D) the shareholders do not approve of such methods and the market prices will decline

 

3) Which of the following helps in avoiding costly transfer-pricing disputes between taxpayers and tax authorities?

A) transfer price redressal panel

B) grievance redressal forum

C) transfer price agreements

D) advanced pricing agreements

4) Which of the following taxes does transfer pricing affect?

A) customs duties

B) dividend taxes

C) corporate taxes

D) property taxes

 

5) Which of the following sections of U.S. Internal Revenue Code govern how multinationals can set transfer prices for tax purposes?

A) Section 328

B) Section 382

C) Section 428

D) Section 482

 

6) Global Giant, a multinational corporation, has a producing subsidiary in a low tax rate country and a marketing subsidiary in a high tax country. If Global Giant wants to minimize its worldwide tax liability, we would expect Global Giant to ________.

A) stop producing in the low tax rate country

B) stop marketing in the high tax rate country

C) establish a low transfer price when the producing unit sells to the marketing unit

D) establish a high transfer price when the producing unit sells to the marketing unit

 

 

 

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more