S5. Consider a decentralized company that has 2 divisions: Gold and Silver.The information for Gold is the following:Fixed and variable costs are £50 per unit.• The intermediary product produced by Gold will be transferred to Silver to create the final product.• Gold does not sell the intermediary product to external customers.·The information for Silver is the following:• Fixed and variable costs of processing the intermediary product equal £80 per unit.• The final product will be sold by Silver to external customers for £150.Considering that managers of the company have established a transfer price policy of full cost plus 12%,which of the following statements is true?O a. Given the current transfer pricing policy, managers from Gold do not have incentives to minimizecosts.O b.O c.O d.Silver will sell the intermediary product to Gold for £56.Gold will have a profit of £14 per unit.None of the answers is true.

There are many methods of pricing some are cost based and some based on the market price and some of…

Consider a decentralized company that has 2 divisions: Gold and Silver. The information for Gold is the following: • Fixed and variable costs are £50 per unit. • The intermediary product produced by Gold will be transferred to Silver to create the final produc • Gold does not sell the intermediary product to external customers. The information for Silver is the following:

Consider a decentralized company that has 2 divisions: Gold and Silver. The information for Gold is the following: • Fixed and variable costs are £50 per unit. • The intermediary product produced by Gold will be transferred to Silver to create the final produc • Gold does not sell the intermediary product to external customers. The information for Silver is the following:

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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