Question : 86.              Jaycee Auto Repair has the following budgeted costs for : 1311805

 

 

86.              Jaycee Auto Repair has the following budgeted costs for the next year:

Time ChargesMaterial Charges

Shop employees’ wages and benefits$120,000$-

Parts manager’s salary and benefits-45,000

Office employee’s salary and benefits30,00015,000

Other overhead15,000 40,000

Invoice cost of parts and materials   –     400,000

Total budgeted costs$165,000$500,000

Jaycee estimates that the repairs to a Cadillac Escalade damaged in an accident will take 45 hours of labor and $3,500 in parts and materials. The total cost of the repairs is

a.$5,890.

b.$7,890.

c.$5,775.

d.$7,015.

 

 

87.              The price used to record a sale between divisions within the same vertically integrated company is called the

a.sales price.

b.integrated price.

c.transfer price.

d.bargain price.

 

 

88.              The overall objective in the determination of a transfer price is to

a.maximize the return of the selling division.

b.minimize the cost to the purchasing division.

c.minimize the return of the selling division.

d.maximize the return to the whole company.

 

 

89.              Which two methods are used most often when establishing a transfer price?

a.Negotiated transfer pricing and cost-based transfer pricing

b.Cost-based transfer pricing and market-based transfer pricing

c.Negotiated transfer pricing and market-based transfer pricing

d.Cost-based transfer pricing and standard-based pricing

 

 

90.              The Selling Division’s unit sales price is $25 and its unit variable cost is $15. Its capacity is 10,000 units. Fixed costs per unit are $6. Current outside sales are 8,000 units. What is the Selling Division’s opportunity cost per unit from selling 2,000 units to the Purchasing Division?

a.$10

b.$25

c.$4

d.$0

 

 

91.              The Selling Division’s unit sales price is $25 and its unit variable cost is $15. Its capacity is 10,000 units. Fixed costs per unit are $6. Current outside sales are 8,000 units. What is the Selling Division’s opportunity cost per unit from selling 3,000 units to the Purchasing Division?

a.$10

b.$25

c.$4

d.$0

 

 

92.              In the minimum transfer price formula, variable cost is defined as the variable cost of

a.all units sold, both internally and externally.

b.units sold externally.

c.units not sold.

d.units sold internally.

 

 

93.              Under the negotiated transfer pricing approach, the minimum transfer price is established by the

a.purchasing division.

b.corporate headquarters management.

c.selling division.

d.corporate negotiator.

 

 

94.              Under the negotiated transfer pricing approach, the maximum transfer price is established by the

a.purchasing division.

b.corporate headquarters management.

c.selling division.

d.corporate negotiator.

 

95.              Assume the Thread Division has excess capacity. The Garment Division wants the Thread Division to furnish them additional spools of thread that could be made using the excess capacity. In a negotiated transfer price, the Thread Division should accept as a minimum any transfer price that exceeds the

a.total cost of producing spools for outside sales.

b.variable costs of producing the additional spools for the Garment Division.

c.contribution margin and outside spool sales.

d.foregone contribution margin on outside spool sales.