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

Q: Cost-Savings Sharing Pricing Defined?

A: It is a project pricing technique where the savings in the cost of the project are mutually shared…

Q: how does the contribution margin pricing method differ from ratio pricing method?

A: The question is based on the concept of pricing policy and methods. The product's price can be…

Q: Are joint cost allocations useful? If they are, for what purpose?

A: Definition: Joint cost: The total costs incurred prior to the split-off point where the joint…

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: In what sense can a variable cost be considered constant?

A: A variable cost is a constant amount per unit produced or used.Therefore the total amount of the…

Q: Why is partitioning an internal rate of return important?

A: Introduction: There are two cash flow components which can form the portioning of internal rate of…

Q: Explain the difference between price-takers and price-setters.

A: When a company cannot dictate prices then it is known as price taker. On the contrary, when a…

Q: What is lower of cost/market, and why is it used? Provide an example.

A: Inventory is a term which depicts the amount of finished goods prevailing in the business. The…

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

A: Disagree with the statement “Cost and price information play no role in negotiated transfer prices”.

Q: What effect do minor deviations from the EOQ have on totalinventory cost?

A: Minor variations from the EOQ will not in general highly affect the total inventory cost except if…

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

A:

Q: Explain the difference between market-based transfer prices and cost-based transfer prices.

A: Market based Transfer Price and Cost Based Transfer Price: Transfer pricing refers to the rules and…

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

A:

Q: What Is Prerequisites for Successful Target and Cost-Based Pricing?

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

Q: What are the optimal prices and profits for selling the goods seperately?

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: Which of the following is an advantage of using cost-based transfer prices? Multiple Choice Such…

A: Cost based transfer pricing is a costing method where the selling cost of the product is based on…

Q: If a firm operates at capacity, the minimum transfer price should be the: external market price any…

A: Solution: If a firm operates at capacity, the minimum transfer price should be the "external market…

Q: What does the lower-of-cost-or-market (LCM) rule require?

A: Lower-of-cost-or-market: The lower-of-cost-or-market (LCM) is a method which requires the reporting…

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: What is the primary disadvantage of basing the costplus pricing formula on absorption cost?

A: Definition: Cost plus-pricing approach: The pricing approach used by the companies to set the target…

Q: which of the following could affect the price

A: Stocks are prone to systematic and unsystematic risks. Factors or risk that affect the entire…

Q: Why can cost benefit analysis be difficult to carry out?

A: Introduction: Cost benefit analysis can be defined as a process which is undertaken by an…

Q: Explain how cost-of-carry is a factor in forward curve prices.

A: Cost of carry is the costs of holding the certain position in the market or in other words it is the…

Q: What are the advantages and disadvantages of target pricing versus cost-based pricing?

A: Advantages of target pricing are as follows: It help in controlling in cost It provide profit with…

Q: What properties should transfer-pricing systems have?

A:

Q: What is the perform

A: one of the objectives of transfer pricing is to performance evaluation and improve the same . fair…

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: How does capacity affect transfer pricing decisions?

A:

Q: Why is there often a conflict between the performance evaluation and cost-minimization objectives of…

A: SOLUTION- TRANSFER PRICING   IS THE ACCOUNTING PRACTICE THAT REPRESENTS THE PRICE THAT ONE DIVISION…

Q: d. If the negotiated price approach is used, what would be the range of acceptable transfer prices?…

A: The Transfer Pricing between the divisions should be such that company will not incur any decrease…

Q: A cost - based transfer price considers the cost of producing the goods when determining the price.…

A: At the time of determining the prices of the goods, the cost of goods-producing is required to be…

Q: if we produce goods over the capacity, should we consider the fixed marketing cost and variable…

A: Fixed marketing costs is fixed costs related with the marketing of the product and this will not be…

Q: How sensitive is the NPV to changes in the quantity sold?

A: Net Present Value (NPV) is a capital budgeting technique which uses a discount rate to bring all the…

Q: Outline the rules for identifying the optimal transfer price.

A: Transfer pricing:- Transfer pricing is considered as the value that is attached to those goods and…

Q: Explain the importance of the excess-capacity issue in setting a competitive bid price.

A:

Q: What is a mixed cost? Give an example.

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: When is it more appropriate to use market-based transfer price rather than cost-based transfer…

A: Transfer pricing:- Its the price at which one unit of a company sells goods to its another unit.…

Q: Explain the objectives of transfer pricing and describe the advantages anddisadvantages of various…

A: Transfer pricing in tax and accounting relates to the laws and procedures for the selling/buying…

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

A: Please find the answers to the above questions below:

Q: Explain why using cost as a transfer price is inappropri-ate when the center producing the product…

A: Profit Center: A profit center may be a part of a business that is expected to form an identifiable…

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…

Q: What are the three methods for determining transfer prices?

A: