Question Details

Which of the following transfer-pricing methods always achieves goal 



1.	In analyzing transfer prices,
	a.	the buyer will not willingly purchase a product for less than the incremental costs incurred to manufacture the product internally.
	b.	the seller will not willingly sell a product for less than the incremental costs incurred to make the product.
	c.	the buyer will willingly pay more than the ceiling transfer price.
	d.	the buyer will not pay less than the ceiling transfer price.

		
2.	The transfer-pricing method that reduces the goal-congruence problems associated with a pure cost-plus-based transfer-pricing method is 
	a.	dual pricing.
	b.	market pricing.
	c.	single pricing.
	d.	both (a) and (b).
	

3.	Dual pricing is not widely used in practice because
	a.	the manager of the supplying division does not have sufficient incentive to control costs.
	b.	it increases goal congruence.
	c.	managers are not insulated from the frictions of the market place.
	d.	of both (b) and (c).

		
4.	An advantage of a negotiated transfer price is
	a.	the close relationship between the negotiated price and the market price.
	b.	the negotiated transfer price preserves divisional autonomy.
	c.	the negotiations usually do not require much time and energy.
	d.	both (b) and (c).


5.	Which of the following transfer-pricing methods always achieves goal congruence?
	a.	A market-based transfer price
	b.	A cost-based transfer price
	c.	A negotiated transfer price
	d.	Full-cost plus a standard profit margin




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