Answered: 1. “Explain why firms choose to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. “Explain why firms choose to decentralise. Provide examples where possible to illustrate your points.”

2. “Distinguish between a cost centre, a profit centre, and an investment centre. Support your answer with one example of each centre.

3. “Peter Division is part of the Fabric Gallery Group. It produces a basic fabric that is then converted in other divisions within the group. The fabric is also produced in other divisions within the Group and a limited quantity can be purchased from outside the group. The fabric is currently charged out by Peter Division at total cost plus 20 per cent profit mark-up.Discuss why the current transfer pricing method used by Peter Division is inappropriate.”

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