17) The president of Silicon Company has just returned from a week of professional development courses and is very excited that she will not have to change the organization from a centralized structure to a decentralized structure just to have responsibility centers. However, she is somewhat confused about how responsibility centers relate to centralized organizations where a few managers have most of the authority.

Required:

Explain how a centralized organization might allow for responsibility centers.

Objective 22.3

1) A product may be passed from one subunit to another subunit in the same organization. The product is known as a(n):

A) interdepartmental product

B) intermediate product

C) subunit product

D) transfer product

2) Transfer prices should be judged by whether they promote:

A) goal congruence.

B) the balanced scorecard method.

C) a high level of subunit autonomy in decision making.

D) Both A and C are correct.

3) A transfer-pricing method leads to goal congruence when managers:

A) always act in their own best interest

B) act in their own best interest and the decision is in the long-term best interest of the manager's subunit

C) act in their own best interest and the decision is in the long-term best interest of the company

D) act in their own best interest and the decision is in the short-term best interest of the company

4) Negotiated transfer prices are often employed when:

A) market prices are stable

B) market prices are volatile

C) market prices change by a regular percentage each year

D) goal congruence is not a major objective

5) The costs used in cost-based transfer prices:

A) are actual costs

B) are budgeted costs

C) can either be actual or budgeted costs

D) are lower than the market-based transfer prices

Answer the following questions using the information below:

Penn Oil Corporation has two divisions, Refining and Production. The company's primary product is Luboil Oil. Each division's costs are provided below:

Production:              Variable costs per barrel of oil$ 9

Fixed costs per barrel of oil$ 6

Refining:Variable costs per barrel of oil$30

Fixed costs per barrel of oil$36

The Refining Division has been operating at a capacity of 40,000 barrels a day and usually purchases 25,000 barrels of oil from the Production Division and 15,000 barrels from other suppliers at $60 per barrel.

6) What is the transfer price per barrel from the Production Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 180% of variable costs?

A) $16.20

B) $27.00

C) $54.00

D) $70.20

7) What is the transfer price per barrel from the Production Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 110% of full costs?

A) $16.50

B) $66.00

C) $72.60

D) $89.10

8) Assume 200 barrels are transferred from the Production Division to the Refining Division for a transfer price of $18 per barrel. The Refining Division sells the 200 barrels at a price of $120 each to customers. What is the operating income of both divisions together?

A) $7,200

B) $7,800

C) $10,800

D) $20,400

17) The president of Silicon Company has just returned from a week of professional development courses and is very excited that she will not have to change the organization from a centralized structure to a decentralized structure just to have responsibility centers. However, she is somewhat confused about how responsibility centers relate to centralized organizations where a few managers have most of the authority.

Required:

Explain how a centralized organization might allow for responsibility centers.

Objective 22.3

1) A product may be passed from one subunit to another subunit in the same organization. The product is known as a(n):

A) interdepartmental product

B) intermediate product

C) subunit product

D) transfer product

2) Transfer prices should be judged by whether they promote:

A) goal congruence.

B) the balanced scorecard method.

C) a high level of subunit autonomy in decision making.

D) Both A and C are correct.

3) A transfer-pricing method leads to goal congruence when managers:

A) always act in their own best interest

B) act in their own best interest and the decision is in the long-term best interest of the manager's subunit

C) act in their own best interest and the decision is in the long-term best interest of the company

D) act in their own best interest and the decision is in the short-term best interest of the company

4) Negotiated transfer prices are often employed when:

A) market prices are stable

B) market prices are volatile

C) market prices change by a regular percentage each year

D) goal congruence is not a major objective

5) The costs used in cost-based transfer prices:

A) are actual costs

B) are budgeted costs

C) can either be actual or budgeted costs

D) are lower than the market-based transfer prices

Answer the following questions using the information below:

Penn Oil Corporation has two divisions, Refining and Production. The company's primary product is Luboil Oil. Each division's costs are provided below:

Production:              Variable costs per barrel of oil$ 9

Fixed costs per barrel of oil$ 6

Refining:Variable costs per barrel of oil$30

Fixed costs per barrel of oil$36

The Refining Division has been operating at a capacity of 40,000 barrels a day and usually purchases 25,000 barrels of oil from the Production Division and 15,000 barrels from other suppliers at $60 per barrel.

6) What is the transfer price per barrel from the Production Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 180% of variable costs?

A) $16.20

B) $27.00

C) $54.00

D) $70.20

7) What is the transfer price per barrel from the Production Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 110% of full costs?

A) $16.50

B) $66.00

C) $72.60

D) $89.10

8) Assume 200 barrels are transferred from the Production Division to the Refining Division for a transfer price of $18 per barrel. The Refining Division sells the 200 barrels at a price of $120 each to customers. What is the operating income of both divisions together?

A) $7,200

B) $7,800

C) $10,800

D) $20,400

17) The president of Silicon Company has just returned from a week of professional development courses and is very excited that she will not have to change the organization from a centralized structure to a decentralized structure just to have responsibility centers. However, she is somewhat confused about how responsibility centers relate to centralized organizations where a few managers have most of the authority.

Required:

Explain how a centralized organization might allow for responsibility centers.

Objective 22.3

1) A product may be passed from one subunit to another subunit in the same organization. The product is known as a(n):

A) interdepartmental product

B) intermediate product

C) subunit product

D) transfer product

2) Transfer prices should be judged by whether they promote:

A) goal congruence.

B) the balanced scorecard method.

C) a high level of subunit autonomy in decision making.

D) Both A and C are correct.

3) A transfer-pricing method leads to goal congruence when managers:

A) always act in their own best interest

B) act in their own best interest and the decision is in the long-term best interest of the manager's subunit

C) act in their own best interest and the decision is in the long-term best interest of the company

D) act in their own best interest and the decision is in the short-term best interest of the company

4) Negotiated transfer prices are often employed when:

A) market prices are stable

B) market prices are volatile

C) market prices change by a regular percentage each year

D) goal congruence is not a major objective

5) The costs used in cost-based transfer prices:

A) are actual costs

B) are budgeted costs

C) can either be actual or budgeted costs

D) are lower than the market-based transfer prices

Answer the following questions using the information below:

Penn Oil Corporation has two divisions, Refining and Production. The company's primary product is Luboil Oil. Each division's costs are provided below:

Production:              Variable costs per barrel of oil$ 9

Fixed costs per barrel of oil$ 6

Refining:Variable costs per barrel of oil$30

Fixed costs per barrel of oil$36

The Refining Division has been operating at a capacity of 40,000 barrels a day and usually purchases 25,000 barrels of oil from the Production Division and 15,000 barrels from other suppliers at $60 per barrel.

6) What is the transfer price per barrel from the Production Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 180% of variable costs?

A) $16.20

B) $27.00

C) $54.00

D) $70.20

7) What is the transfer price per barrel from the Production Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 110% of full costs?

A) $16.50

B) $66.00

C) $72.60

D) $89.10

8) Assume 200 barrels are transferred from the Production Division to the Refining Division for a transfer price of $18 per barrel. The Refining Division sells the 200 barrels at a price of $120 each to customers. What is the operating income of both divisions together?

A) $7,200

B) $7,800

C) $10,800

D) $20,400

They have a magnificent team. These people are always kind and willing to listen to your concerns or issues. Better yet, your assignment is always ready before the time, they usually send you a draft to double-check before they finalize your paper.

Completed quickly and followed instructions given. Grammar, spelling, etc. was all good as well. Thank you so much! Will hire in the future.

The work has not been graded but I like the output that was submitted to me. Is it possible for the same prof to do the next assignment I will be submitting? If possible, I will greatly appreciate it.

My third using this writer and absolutely amazing work! Very punctual and very understanding.

Outstanding job in writing my paper. I am always thrill to receive a well written paper that follows the instructions and the thorough details put into my paper. The quality of this paper is beyond awesome. Thank you so much.

I absolutely love this writer! He/she always cranks out a fabulous paper and follows the assignment guidelines/instructions perfectly. Thanks again for always providing such quality work!!!

It took some time to achieve the product I was looking for, but we eventually got there. I do feel like a lot of hard work was put into this, and it even exceeded the page requirement. I'm pretty pleased overall. I give my thanks.

Outstanding work! This writer followed every instruction and my paper came back with an A! I recommend to anyone needing help! Thank you again ❤️

Outstanding job in writing my paper. I am always thrill to receive a well written paper that follows the instructions and the thorough details put into my paper. The quality of this paper is beyond awesome. Thank you so much.

Made 100% on both the outline and the paper. Quick turnaround time and my writer responded within 30 min or less. Any edits my instructor needed, my writer was patient and worked diligently to accomplish the task. Would recommend my writer to anyone!

You are making my life so much easier! I am a single mom that works and goes to school. You guys are helping me with my projects so I can have more free time with my son.

I was sure it can fit in a single page but the next time I will add one more page because I am impressed with your professionalism and quality. Will use many more times till I graduate.

Simple registration and quality services. I just ordered one paper, and it was good enough to pass the exam. That is what I need the most. Good job.

I couldn’t finish my freaking essay, and I was very desperate. A friend of mine sent me a link, and that is how I found out about you guys. Thank you for professional tips and editing. Now, I understand how to write it properly.

I’m so grateful to you since you managed to complete my term paper in one day! You are definitely the best company ever!

I am sure on your ability to provide any type of paper I will order. I wish I could develop that skill your writers have to be able to have a flow of ideas and excellent sequencing of thoughts in writing.

I ordered a thesis paper and was satisfied. All the guys were polite and highly professional, even when I wrote to them several times per day. Thanks for your passion!

I turned to the service twice, and my papers always were beyond the expectations. To tell the truth, I was ready to find some grammar errors or something like that. However, everything was neat and tidy.

My friend recommended Doctor My Essay to me. It is convenient! Now we both turn to the service periodically coz wanna save some time and use it more effectively. I know that while I’m developing my startup, an expert is working on paper. Time management in work!

I write all paper works by myself but have some problems with literacy. Actually, I have enormous problems because English is not my native language. However, with proofreading from Doctor My Essay, I can relax and don’t be ashamed of mistakes.

Your ability to write concisely is a finding. The paper has a solid argument. It’s clear that the writer understood central claim about the topic. He also presented original ideas to consider.

That paper got the highest grade in my class and the professor thinks I’m the smartest student. Lol.

I was convinced that paper writing services are the fiction for naive students. But when it came to my research paper that was to be composed in 72 hours, I had no other options. I made the right choice when I ordered it from you!

I was also satisfied with the service. Usually, I write everything by myself, but this time ( I have no idea how it happens!) I missed the deadline. My writer was very responsible, wrote the essay quickly, and kept the instructions. Nice to know that such experts exist!

It is really affordable! The prices start from 9$, which is an excellent proposal on the market. Recently I worked with another service that took much more money and provided lower quality papers.

I am absolutely satisfied. I am first timer here. Revision was made quickly, and the author met my expectations. Thanks a lot. Paper is phenomenal.

Having heard a lot of negative reviews about such services, I was a bit skeptical. However, our cooperation with Doctor My Essay was without pitfalls. I made two comments about the final work, and they re-wrote some parts very promptly. I am satisfied and will turn to them in the future.

It was my first experience in online ordering, and I was a bit nervous. However, this was for nothing. I’ve got a high mark!

I understand that buying essays is a doubtful thing. You don’t put effort, don’t represent your ideas… However, I don’t perceive Doctor My Essay as a standard service. They don’t sell papers. They share high expertise!

According to my previous experience, this service is really the best. They support the client and have competitive writers. I give them a perfect score!

Nice service! It is cool that you can use the calculator on the main page and understand the price policy. For me, it is a huge plus!

Thanks to God I found this service! If I didn’t send my research to the teacher on time, he would eat me. I tell you! However, with doctor my essay service, I met the deadline, and I am still alive.

Your service is excellent! Convenient and not expensive. Thanks for that!

If you have problems with time management, just like me, you need to cooperate with Doctor My Essay. Once you registered and made the order, you understand how easier it makes your life! Everything is online: ordering, communication… You can control the process everywhere and be sure that an expert will provide a high-level paper.