Question

question 16

one reason companies use full-cost transfer pricing is that it provides relevant costs for:

1-long-run decisions and for short run decisions

2-short-run decisions but not for long run decisions

3-long-run decisions even thought poor short run decisions may result

4-long - run decisions and for employee staffing decisions

5- short run decisions at the expense of the company

question 20

subunits x and y determined the price for interdepartmental services during the last monthly meeting using the selling prices charged to outside parties this is an example of

1- negotiated transfer price

2-market based transfer prices

3-cost based transfer prices

4- multinational transfer prices

5- subunit transfer prices

question 2

which of the following is false concerning profit centres and cost centres ?

1-a profit centres can exist within a centralized organization

2- a cost centres can exist within a centralized organization

3-a profit centres can exist within a decentralized organization

4-a cost centres can exist within a decentralized organization

5-if a profit centre exists within a centralized organization there cannot be any cost centres in the organization

question 5

which of the following is an advantage of an advance transfer price arrangement (APA)

1- APA save company from the cost of keeping related party transfer records

2-the canadian government provides APA free of charged to promote canadian exports

3-they are always cost effective

4- an APA can reduce or eliminate the opportunity cost associated with a canada revenue agency transfer price audit

5-an APA prevents companies from having to endure transfer price audits

Answer 1

Question 16 : The correct answer is "3" : Long-run decisions even though poor short run decisions may result

Question 20 : The correct answer is "2" : Market based transfer pricing (This is because we are basically using the prices at which we are selling to a third party(customers) in the open market. However some might answer this question as negotiated transfer pricing as well as it is determined by both units in a monthly meeting)

Question 2 : The correct answer is "5" : If a profit centre exists within a centralized organization there cannot be any cost centres in the organization.

Question 5 : The correct answer is "4" : An APA can reduce or eliminate the opportunity cost associated with a Canada revenue agency transfer price audit.