Question : 31) A transfer pricing method should lead to which of the : 1196205

 

31)

A transfer pricing method should lead to which of the following results? 31)

______ A)

managers always acting in their own best interest B)

managers acting in their own best interest and their decisions being in the long-term best interest of the company C)

managers acting in their own best interest and their decisions being in the short-term best interest of the company D)

managers competing with each other E)

managers acting in their own best interest and their decisions being in the long-term best interest of the manager’s subunit

32)

Subunits X and Y determined the price for interdepartmental services during the last monthly meeting, using the selling prices charged to outside parties. This is an example of 32)

______ A)

market-based transfer prices. B)

multinational transfer pricing. C)

negotiated transfer prices. D)

subunit transfer prices. E)

cost-based transfer prices.

33)

Negotiated prices are typically used when which of the following circumstances exists? 33)

______ A)

market prices fall and rise in an unusual manner B)

market prices are high C)

market prices are low D)

both subunits freely agree on the initial price discussed E)

market prices are not available

34)

Blackoil Corp. has two divisions, Refining and Production. The company’s primary product is Clean Oil. Each division’s costs are provided below:

 

Refining:

 

Variable costs per litre of oil$30

Fixed costs per litre of oil$24

 

Production:

Variable costs per litre of oil$ 6

Fixed costs per litre of oil$ 4

 

The Production Division is able to sell the oil to other areas for $24 per litre. The Refining Division has been operating at a capacity of 80,000 barrels a day, purchasing 50,000 barrels of oil, on average, from the Production Division and 30,000 barrels, on average, from other suppliers at $40 per barrel.

 

What is the transfer price per litre assuming the method used to place a value on each barrel of oil is 175% of variable costs? 34)

______ A)

$24.50 B)

$17.50 C)

$12.50 D)

$10.50 E)

$12.00

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

 

Blackoil Corp. has two divisions, Refining and Production. The company’s primary product is Clean Oil. Each division’s costs are provided below:

 

Refining:Variable costs per litre of oil$30

Fixed costs per litre of oil$24

 

Production:

Variable costs per litre of oil$ 6

Fixed costs per litre of oil$ 4

 

The Production Division is able to sell the oil to other areas for $24 per litre. The Refining Division has been operating at a capacity of 80,000 barrels a day, using oil from the Production Division and oil purchased from other suppliers. The Refining Division usually purchases 50,000 barrels of oil, on average, from the Production Division and 30,000 barrels, on average, from other suppliers at $40 per barrel.

35)

What is the transfer price per litre from the Production Division to the Refining Division assuming the method used to place a value on each barrel of oil is 120% of full costs? 35)

______ A)

$12.50 B)

$9.50 C)

$7.20 D)

$12.00 E)

$16.80

36)

What is the transfer price per litre from production to refining if the market price method of pricing is used? 36)

______ A)

$36 B)

$38 C)

$40 D)

$32 E)

$24

37)

What is the Production Division’s operating income per 200 litres of oil reported under the 175% of variable costs method? 37)

______ A)

$1,500 B)

$1,200 C)

$880 D)

$(100) E)

$100

38)

What is the Refining Division’s operating income if 150 barrels of oil are sold at$110 each and 200 litres are transferred in? 38)

______ A)

$7,500 B)

$16,500 C)

$8,500 D)

$15,600 E)

$8,400

39)

Division A sells soybean paste internally to Division B, which, in turn, produces soybean burgers that sell for $5 per kilogram. Division A incurs costs of $0.75 per kilogram, while Division B incurs additional costs of $2.50 per kilogram.

What is Division A’s operating income per kilogram assuming the transfer price of the soybean paste is set at $1.25 per kilogram? 39)

______ A)

$1.525 B)

$0.500 C)

$0.875 D)

$1.625 E)

$1.250

40)

Division A sells soybean paste internally to Division B, which, in turn, produces soybean burgers that sell for $5 per kilogram. Division A incurs costs of $0.75 per kilogram, while Division B incurs additional costs of $2.50 per kilogram.

What is Division B’s operating income per kilogram assuming the transfer price of the soybean paste is set at $1.25 per kilogram? 40)

______ A)

$1.250 B)

$0.875 C)

$0.500 D)

$1.625 E)

$1.525