Exam 22: Management Control Systems, transfer Pricing, and Multinational Considerations

Effort in terms of management control systems is defined in terms of physical exertion such as a worker producing at a faster rate.

Plish Company manufactures only one type of washing machine and has two divisions,the Compressor Division,and the Fabrication Division.The Compressor Division manufactures compressors for the Fabrication Division,which completes the washing machine and sells it to retailers.The Compressor Division "sells" compressors to the Fabrication Division.The market price for the Fabrication Division to purchase a compressor is $42.00.(Ignore changes in inventory. )The fixed costs for the Compressor Division are assumed to be the same over the range of 12,000-17,000 units.The fixed costs for the Fabrication Division are assumed to be $8.00 per unit at 17,000 units. Assume the transfer price for a compressor is 145% of total costs of the Compressor Division and 1500 of the compressors are produced and transferred to the Fabrication Division.The Compressor Division's operating income is ________.

Timekeeper Corporation has two divisions,Distribution and Manufacturing.The company's primary product is high-end watches.Each division's costs are provided below: The Distribution Division has been operating at a capacity of 4,009,000 units a week and usually purchases 2,004,500 units from the Manufacturing Division and 2,004,500 units from other suppliers at $13.00 per unit. Assume 110,000 units are transferred from the Manufacturing Division to the Distribution Division for a transfer price of $8.00 per unit.The Distribution Division sells the 110,000 units at a price of $18 each to customers.What is the operating income of both divisions together?

In markets that are not perfectly competitive,________.

Division A sells ground veal internally to Division B,which in turn,produces veal burgers that sell for $19 per pound.Division A incurs costs of $1.25 per pound while Division B incurs additional costs of $6.50 per pound. Which of the following formulas correctly reflects the company's operating income per pound?

In a management control system,which of the following is described as the extent to which managers strive or endeavor in order to achieve a goal?

Which of the following best describes an Advanced Pricing Agreement (APA)?

The cost used in cost-based transfer prices can be actual cost or budgeted cost.

Aerated Water Company makes internal transfers at 175% of full cost.The Soda Refining Division purchases 30,500 containers of carbonated water per day,on average,from a local supplier,who delivers the water for $31 per container via an external shipper.To reduce costs,the company located an independent supplier in Missouri who is willing to sell 30,500 containers at $28 each,delivered to Aerated Water Company's Shipping Division in Missouri.The company's Shipping Division in Missouri has excess capacity and can ship the 30,500 containers at a variable cost of $8.00 per container.What is the total cost to Aerated Water Company if the carbonated water is purchased from the local supplier?

A company should use cost-based transfer prices ________.

Division A sells ground veal internally to Division B,which in turn,produces veal burgers that sell for $12 per pound.Division A incurs costs of $5.25 per pound while Division B incurs additional costs of $11.50 per pound. What is Division A's operating income per burger,assuming the transfer price of the ground veal is set at $7.00 per burger?

The costs used in cost-based transfer prices ________.

In analyzing transfer prices,the ________.

A well-designed management control system uses information from ________.

Plish Company manufactures only one type of washing machine and has two divisions,the Compressor Division,and the Fabrication Division.The Compressor Division manufactures compressors for the Fabrication Division,which completes the washing machine and sells it to retailers.The Compressor Division "sells" compressors to the Fabrication Division.The market price for the Fabrication Division to purchase a compressor is $60.00.(Ignore changes in inventory. )The fixed costs for the Compressor Division are assumed to be the same over the range of 8000-13,000 units.The fixed costs for the Fabrication Division are assumed to be $11.50 per unit at 13,000 units. What is the transfer price per compressor from the Compressor Division to the Fabrication Division if the transfer price per compressor is 110% of full costs?

Negotiated transfer prices are often employed when ________.

Which of the following taxes does transfer pricing affect?

For each of the following,identify whether it BEST relates to market-based,cost-based,negotiated,or all types of transfer pricing.

Which of the following best describes a transfer price?

Transfer prices do not affect managers whose compensation is directly dependent on an organization's operating income because transfer prices affect only divisional profits and not the organization's profit.