REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in Accounting)
16th Edition
ISBN: 9780134789705
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Question
Chapter 22, Problem 22.12Q
To determine
Transfer Pricing:
This refers to a process of pricing in which one sub-unit of an organization charges a price to another sub-unit for supplying a product or service to the sub-unit of the same organization.
To explain: The two reasons because of which dual-pricing system of transfer pricing is not widely used.
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Students have asked these similar questions
Give two reasons why transfer pricing's dual-pricing scheme isn't frequently implemented.
“Cost and price information play no role in negotiated transfer prices.” Do you agree? Explain.
Explain one advantage and one disadvantage of the following transfer pricing methods:
Cost
Market based
Negotiated
Chapter 22 Solutions
REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in Accounting)
Ch. 22 - Prob. 22.1QCh. 22 - Describe three criteria you would use to evaluate...Ch. 22 - What is the relationship among motivation, goal...Ch. 22 - Name three benefits and two costs of...Ch. 22 - Organizations typically adopt a consistent...Ch. 22 - Transfer pricing is confined to profit centers. Do...Ch. 22 - What are the three methods for determining...Ch. 22 - What properties should transfer-pricing systems...Ch. 22 - All transfer-pricing methods give the same...Ch. 22 - Prob. 22.10Q
Ch. 22 - Prob. 22.11QCh. 22 - Prob. 22.12QCh. 22 - Prob. 22.13QCh. 22 - Under the general guideline for transfer pricing,...Ch. 22 - How should managers consider income tax issues...Ch. 22 - Evaluating management control systems, balanced...Ch. 22 - Cost centers, profit centers, decentralization,...Ch. 22 - Prob. 22.18ECh. 22 - Prob. 22.19ECh. 22 - Multinational transfer pricing, effect of...Ch. 22 - Prob. 22.21ECh. 22 - Multinational transfer pricing, global tax...Ch. 22 - Prob. 22.23ECh. 22 - Prob. 22.24ECh. 22 - Transfer-pricing problem (continuation of 22-24)....Ch. 22 - Prob. 22.26PCh. 22 - Prob. 22.27PCh. 22 - Effect of alternative transfer-pricing methods on...Ch. 22 - Goal-congruence problems with cost-plus...Ch. 22 - Multinational transfer pricing, global tax...Ch. 22 - Transfer pricing, external market, goal...Ch. 22 - Prob. 22.32PCh. 22 - Transfer pricing, goal congruence, ethics. Cocoa...Ch. 22 - Prob. 22.34PCh. 22 - Transfer pricing, perfect and imperfect markets....Ch. 22 - Prob. 22.36PCh. 22 - Prob. 22.37P
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- C. Highlight ONE (1) advantage and ONE (1) disadvantage of the market-based transfer pricing method.arrow_forwardDiscuss the advantages and disadvantages of a market-based transfer pricing approach.arrow_forwardWhy is there often a conflict between the performance evaluation and cost-minimization objectives of transfer pricing?arrow_forward
- When is it more appropriate to use market-based transfer price rather than cost-based transfer price?arrow_forwardDiscuss the advantages and disadvantages of a negotiated transfer pricing approach.arrow_forwardIn 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 profitarrow_forward
- Determining the best approach to pricing requires a cost-benefit trade-off. Explain.arrow_forwardThis 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 pricearrow_forwardDiscuss the advantages and disadvantages of a cost-based transfer pricing approach.arrow_forward
- What is the primary disadvantage of basing the costplus pricing formula on absorption cost?arrow_forwardWhich 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.arrow_forwardDescribe three limitations of the economic, profitmaximizing model of pricing.arrow_forward
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