“Cost and price information play no role in negotiated transfer prices.” Do you agree? Explain.

Q: What assumption is usually made concerning sales mix inCVP analysis?

A: Sales mix: A proportion of two or more products sold by the company to maximize the profit, that…

Q: explain how sunk costs create a barrier to entry into the market place.

A: Sunk costs are expenses that can not be retrieved if a corporation wishes to leave a market.

Q: What is a transfer price? What are the three main approaches to setting transfer prices?

A: Transfer pricing:   Transfer pricing refers to the setting of prices for goods and services that are…

Q: Define predatory pricing, dumping, and collusive pricing.

A: Target Costing:Target costing refers to the cost that is ascertained as per the needs and wants of…

Q: Describe a situation in which the sales value at splitoff method cannot be used but the NRV method…

A: Relative Sales Value at Split off Method: Relative sales value at split off method allocates joint…

Q: Explain how the lower of cost and net realizable value rule is applied to purchase commitments.

A: Purchase Commitments: It refers to the commitments or contract made by a company with its suppliers…

Q: Using the concept of substitution and income effect, explain why means-tested transfer programs…

A: The income effect  is basically the shift in consumer consumption of items as a result of  income…

Q: Identify the relative advantages and disadvantages of basing transfer prices on total costs,…

A:

Q: Give two reasons why transfer pricing's dual-pricing scheme isn't frequently implemented.

A: This question explains about the transfer pricing's dual-pricing scheme is frequently implemented.

Q: When a buying division purchases from outside supplier because the minimum transfer price is higher…

A: The maximum price is the price that can be paid by the buying decision so it may have no loss.

Q: Define the term make-or-buy (or outsourcing) analysis?

A: Make or buy: purchasing of goods from the outside vendors is called outsourcing.

Q: “Transfer pricing is confined to profit centers.” Do you agree? Explain.

A:

Q: FIFO cost of goods sold?

A: Goods available for sale Cost of goods sold + Ending inventory As per LIFO method,   Cost of…

Q: ferent between Informal and formal cost of sales

A: Step 1   The cost of sales is the amount of all expenses incurred in the production of a product or…

Q: Calculate the lowest acceptable transfer price for the seller (Division A) ?

A: Calculation of contribution per unit of Division A Particulars Amount Selling price per unit 76…

Q: According to our authors, explain the concept of “lower-of-cost-or-market.”

A: When a company prepares its financial statement, it reports certain items in the financial statement…

Q: Describe and apply the lower-of-cost-or-market rule.

A: Cost:   It is the economic value incurred by an organization to produce a product or render a…

Q: Which of the following transfer price approaches is used when the transfer price is set at the…

A: Transfer Price  : Price at which related parties transact with each other is known as transfer…

Q: Explain realizable value less than cost or cost greater than net realizable value?

A: Introduction:- The following formula used to calculate net realizable value as follows under:- Net…

Q: Give an example on the Sell or process further and solve it

A: Sell or process further is a Managerial decision taken by considering factors like cost, sales…

Q: Explain one advantage and one disadvantage of the following transfer pricing methods: Cost Market…

A: first let us understand each of these methods briefly: Cost Method - Under this method goods are…

Q: “Under the general guideline for transfer pricing, the minimum transfer price will vary depending on…

A: Transfer Pricing: This refers to a process of pricing in which one sub-unit of an organization…

Q: Understand and apply the lower-of-cost-or-market rule.

A: Cost: It is the economic value incurred by an organization to produce a product or render a service.

Q: Csn you incorporate Transactional pricing in the same agreement as formula pricing and why or why…

A: Answer Concept  Transactional pricing is  the pricing model in which customers are charged on the…

Q: Give two reasons why the dual-pricing system of transfer pricing is not widely used.

A:

Q: Why do you think that having a price structure important?

A: Pricing strategies are the methods companies use to price products and services. Almost all…

Q: according to pas 2, net realizable value and fair value less cost to sell are the same

A: Net realizable value is used to measure the value of assets by estimating the amount the seller…

Q: What is one potential limitation of full-cost-based transfer prices?

A: Full cost based transfer pricing means transfer price based on total product cost per unit which…

Q: What is meant by Transfer price and why transfer prices are needed? 2- Distinguish between Traceable…

A: Meaning of Transfer Price, Traceable and Common cost is given below,

Q: sales commissions are regarded as a product costs true false

A: Period Costs are costs which are not assigned to the products but are charged as expenses against…

Q: “Variable costs and differential costs mean the same thing.” Do you agree? Explain

A: Differential cost:   The difference between the costs of two alternatives is considered as a…

Q: gross margin for FPD if it accepted the transfer price

A: Variable costs P400,000 Fixed costs P100,000 Total cost (A) P500,000 Total number of units…

Q: The three common approaches to setting transfer prices include: the _____ price approach, where the…

A: There are three approaches, cost, market and negotiated.

Q: Identify three cost-based transfer prices. What are the disadvantages of cost-based transfer prices?…

A: Transfer Pricing: It is the value at which goods and services are transferred from one unit to…