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.

Question

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Answer 1

Question

Chapter 13, Problem 49P

1.

To determine

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.

To determine

Calculate the contribution margin for the Mining Division and the Metals Division by using the market price as the transfer price.

3.

To determine

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.

To determine

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.

To determine

Identify one of the three type of transfer prices is most likely to stimulate desirable management behaviour at PCRC.

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Answer 2

Question

Chapter 13, Problem 49P

1.

To determine

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.

To determine

Calculate the contribution margin for the Mining Division and the Metals Division by using the market price as the transfer price.

3.

To determine

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.

To determine

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.

To determine

Identify one of the three type of transfer prices is most likely to stimulate desirable management behaviour at PCRC.

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Answer 3

Question

Chapter 13, Problem 49P

1.

To determine

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.

To determine

Calculate the contribution margin for the Mining Division and the Metals Division by using the market price as the transfer price.

3.

To determine

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.

To determine

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.

To determine

Identify one of the three type of transfer prices is most likely to stimulate desirable management behaviour at PCRC.

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Answer 4

Question

Chapter 13, Problem 49P

1.

To determine

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.

To determine

Calculate the contribution margin for the Mining Division and the Metals Division by using the market price as the transfer price.

3.

To determine

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.

To determine

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.

To determine

Identify one of the three type of transfer prices is most likely to stimulate desirable management behaviour at PCRC.

Expert Solution & Answer

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Answer 5

Chapter 13, Problem 49P

1.

To determine

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.

To determine

Calculate the contribution margin for the Mining Division and the Metals Division by using the market price as the transfer price.

3.

To determine

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.

To determine

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.

To determine

Identify one of the three type of transfer prices is most likely to stimulate desirable management behaviour at PCRC.

Answer 6

Chapter 13, Problem 49P

1.

To determine

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.

Answer 7

Chapter 13, Problem 49P

1.

To determine

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.

Answer 8

2.

To determine

Calculate the contribution margin for the Mining Division and the Metals Division by using the market price as the transfer price.

Answer 9

2.

To determine

Calculate the contribution margin for the Mining Division and the Metals Division by using the market price as the transfer price.

Answer 10

3.

To determine

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.

Answer 11

3.

To determine

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.

Answer 12

4.

To determine

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).

Answer 13

4.

To determine

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).

Answer 14

5.

To determine

Identify one of the three type of transfer prices is most likely to stimulate desirable management behaviour at PCRC.

Answer 15

5.

To determine

Identify one of the three type of transfer prices is most likely to stimulate desirable management behaviour at PCRC.

Answer 16

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Answer 17

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Answer 18

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Answer 19

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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.

Solution Summary: The author explains why the transfer prices based on total actual costs are not appropriate as the basis for the divisional performance measurement.

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.

Calculate the contribution margin for the Mining Division and the Metals Division by using the market price as the transfer price.

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.

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).

Identify one of the three type of transfer prices is most likely to stimulate desirable management behaviour at PCRC.

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Chapter 13 Solutions