Exam 10: Management Control in Decentralized Organizations

If the segments in a firm buy from the same outside suppliers all the time,they are good candidates for decentralization.

Use of ________ in evaluating capital investment projects will promote goal congruence and lead to better decisions than using ________.

For multinational companies,worldwide income taxes do not influence the setting of transfer prices.

Economic profit is ________ less ________.

The following information is available for the Stanley Company: Sales for year \ 1,000,000 Average invested capital for year \3 12,500 return on investment 20\% What is the operating income?

Organizations should choose performance metrics that improve the alignment of managerial incentives with ________.

The variable cost of Part X is $50 per unit and the full cost of the part is $80 per unit.The part is produced in Country Z and transferred to a plant in Country B.Country Z has a 10% income tax rate.Country B has a 50% income tax rate and an import duty equal to 10% of the price of the item.Part X can be transferred at full cost or variable cost.Assume Part X is transferred at full cost.By using full cost instead of variable cost for the transfer price,the income tax effect per unit in Country B is ________.

When determining a transfer price,outlay cost is often the variable cost for producing the item transferred.

A general rule for transfer pricing is that the transfer price should equal the sum of outlay cost and opportunity cost.