which of the following are potential areas for cost reduction with a merger or acquisition? (Check all that apply) A) economies of sale B) economies of vertical integration C) complementary resources D) reduction in EPS E) higher transaction costs
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which of the following are potential areas for cost reduction with a merger or acquisition? (Check all that apply)
A) economies of sale
B) economies of vertical integration
C) complementary resources
D) reduction in EPS
E) higher transaction costs
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- 2. Transfer prices can be based on any of the following methods except a)variable cost b)replacement cost c)negotiated price between selling and buying divisions d)external market price e)variable and fixed costsSelect Among the choices, this transfer prices basis is considered as the most inferior one: a. variable cost transfer pice b. full cost transfer price c. negotiatied transfer price d. external market transfer price e. dual transfer priceCONSOLIDATION - INTERCOMAPANY PROFIT Answer it with solution:
- In a transfer pricing decision, which of the following factors should be considered? Both A and B None of the above Market price and cost Negotiation and target profitTransfer prices can be based on any of the following methods except Multiple Choice variable and fixed costs negotiated price between selling and buying divisions replacement cost variable cost external market priceThis transfer prices basis is considered to be the most inferior one a. variable cost transfer pice b. full cost transfer price c. negotiatied transfer price d. external market transfer price e. dual transfer price
- Assume you are the president of Shaw. Determine a mutually beneficial transfer price assuming there is excess capacity.What range of transfer prices will motivate divisions S and T to demand the quantities that maximize overall income , as well as motivate division R to produce the sum of those quantities?1. “Transfer pricing is confined to profit centres”. Do you agree? Why? 2. Give three general methods for determining transfer prices. 3. What properties should transfer-pricing systems have? 4. “All transfer-pricing methods give the same division operating income.” Do you agree? Explain. 5. Under what conditions is a market-based transfer price optimal? 6. What is one potential limitation of full cost-based transfer pricing?
- Which of the following is an advantage of using cost-based transfer prices? Multiple Choice Such prices are an objective measure and easy to compute. Such prices motivate the buying division to control cost. Such prices provide a sense of fairness. Such prices will usually exceed the market-based or negotiated transfer prices.3. Match the following terms with the correct definition in the table below. List of possible terms: • Transfer price • Negotiated transfer price • Transfer pricing Market price • Intermediate market Term (fill in) Definition The price normally charged for a similar product to an external con- sumer The practice that focuses on how companies price goods or services transferred between a company's segments A competitive outside market for a similar product The price one division charges for a good or service sold to another division within the company A transfer price mutually agreed upon between the buying and selling divisionsIf the minimum transfer price of the selling division is less than the maximum transfer price of the buying division, the intermediate product should be transferred internally. Do you agree or disagree? Why?
