1.
Explain the reasons for which the transfer prices based on the total actual costs are not appropriate as the basis for the divisional performance measurement.
2.
Calculate the contribution margin for the Mining Division and the Metals Division by using the market price as the transfer price.
3.
Explain if Company PCR were to institute the usage of the transfer prices that are negotiated and allow divisions to buy and sell on the open market; determine the price range for the toldine that would be acceptable for both the Divisions.
4.
Using the general transfer-pricing rule calculate the lowest transfer price that would be acceptable to the Mining Division. Explain whether the answer is consistent with the conclusion that is made in requirement (3).
5.
Identify one of the three type of transfer prices is most likely to stimulate desirable management behaviour at PCRC.
Want to see the full answer?
Check out a sample textbook solution
Chapter 13 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
- Sub. General Accountarrow_forwardCompute bolster's predetermined overhead ratearrow_forwardFleck's standard quantities for 1 unit of the product include 2 pounds of materials and 1.5 labor hours. The standard rates are $4 per pound and $14 per hour. The standard overhead rate is $16 per direct labor hour. The total standard cost of Fleck's product is: A) $29 B) $34 C) $45 D) $53arrow_forward
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning