Market-based transfer prices are best for the buying division. the company when the selling division is operating below capacity. the company when the selling division is operating at capacity. the buying division if it is operating at capacity.

Market-based transfer prices are best for the buying division. the company when the selling division is operating below capacity. the company when the selling division is operating at capacity. the buying division if it is operating at capacity.

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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Question

Market-based transfer prices are best for

the buying division.
the company when the selling division is operating below capacity.
the company when the selling division is operating at capacity.
the buying division if it is operating at capacity.

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Similar questions

Describe two bases for setting a transfer price and briefly explain why one would expect managers to have a bias toward buying internally before selling to an external party.
Which of the followings is NOT an advantage of financial institutions in consumption smoothing? A. They help to solve moral hazard and adverse selection issues. B. They help to share risks. C. They help to reduce transaction costs. D. They help to create more jobs.
Cost-volume-profit (CVP) analysis for revenue planning determines: The desired profit level of a firm. Both revenue maximization and cost minimization. The costs associated with a certain level of revenue. The max amount of revenue a firm can receive. The revenue required to achieve a desired profit level.
When negotlating a transfer price, whlch prlce Is most acceptable to the selling divislon if they are operating with Idle capacity? Multiple Choicel the price must cover at least the variable manufacturing costs of the selling division the price must be less than the variable manufacturing costs of the selling division the price must cover at least the variable manufacturing costs of the buying division the price must cover at least the selling price to outside customers
Variable costing has an advantage over absorption costing for which of the following purposes? all of the choices mentioned analysis of profitability of products, territories, and other segments of a business determining the CVP relationship among the major factors of selling price, sales mix, and sales volume minimizing the effects of inventory changes on net income
When the selling division is a full capacity, the goal congruent transfer price will be the: market price actual full cost actual variable cost standard full cost actual variable cost plus markup
5
When the selling division in an Internal transfer can sell every product at Its market price, then the lowest acceptable transter price as far as the seling diion is concened is Multiple Cholce The amount that the purchasing division would have to pay an outslde seller to acquire a similar product for Its use. The fixed cost of producing a unit of product. The market price charged to outside customers. The variable cost of producing a unit of product. Total cost of producing a unit of product.
Which is the best description of a dual transfer price? A) The receiving division is charged the market value of the item transferred while the supplying division is credited with the standard variable cost B) The receiving division is credited the market value of the item transferred while the supplying division is charged with the standard variable cost C) The receiving division is charged the standard variable cost transferred while the supplying division is credited with the market value of the item D) The receiving division is credited the standard variable cost transferred while the supplying division is charged with the market value of the item