Why is there often a conflict between the performance evaluation and cost-minimization objectives of transfer pricing?

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: The advantages of standard costing exceeds its disadvantages. True or false? Explain further

A: Standard Costing The primary purpose of implementing the cost accounting system to any organisation…

Q: Cost-volume-profit analysis favors either variable costing or absorption costs. Why?

A: The CVP analysis is used to analyse the impact of changes in variable cost and fixed cost on net…

Q: Identify and explain the criticisms of using return on investment (ROI) as the onlyperformance…

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Q: Why is there a need to separate mixed cost as to variable & fixed cost?

A: Variable cost: these are the costs which vary with the units produced. These costs increase by…

Q: Costs that will differ between alternatives and influence the outcome of a decision are

A: Cost:   Cost can be defined as the cash and cash equivalent which is incurred against the products…

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,…

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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.

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Q: Why do proponents of variable costing prefer variable costing when making pricing decisions?

A: Definition:   Variable costing: It refers to the method of product costing in which the price of the…

Q: "ABC systems may result in misallocation of indirect costs." Do you agree? Give reasons for your…

A: ABC system means Activity Based Costing system in which all indirect costs or overhead costs are…

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: Why do proponents of absorption costing argue that absorption costing is preferable as the basis for…

A: The absorption costing argue that absorption costing is preferable as the basis for pricing…

Q: What questions should managers answer when considering special pricing orders?

A: Definition:   Special Pricing: When businesses get Special orders from its customers for bulk…

Q: Why are some quality costs hard to measure?

A: Quality Cost: The quality cost refers to the costs associated with the prevention and detection of…

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: Given the weaknesses of cost-based pricing, why wouldany company use this method?

A: Cost-based pricing means setting prices based on the cost of goods and services.  The major…

Q: what is tactical cost analysis?  what steps in the tactical decision making model correspond to…

A: The application of appropriate cost data to determine the solution that gives the company a greater…

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: 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 circumstances might create distortions where estimated costs are not an accurate representation…

A: The estimated costs are the costs determined through the estimation process on past…

Q: How does capacity affect transfer pricing decisions?

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Q: ANSWER TRUE OR FALSE   Transfer prices can be used to promote goal congruence among operating…

A: Let's understand some basics  Transfer pricing is an accounting practice that represents the price…

Q: Explain why sunk costs are not considered in the analysis ofinvestment alternatives.

A: A sunk cost is also known as the retrospective cost, is a cost that cannot be recovered because it…

Q: An alternative concept of fairness in cost allocation, absent the cause-and-effect basis, includes?

A: A cause and effect allocation basis is the cost allocation method in which the allocation base is…

Q: Why do product-costing systems based on a single, volume-based cost driver tend to over-cost…

A: Single volume-based cost driver means the basis of allocation of costs to particular products using…

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

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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: Which of the following is NOT considered in cost-volume-profit analysis?

A: Answer: opportunity costs.

Q: From the standpoint of cost control, why is the FIFO method superior to the weighted-averagemethod?

A: First-In-First-Out (FIFO) Method:   It is a method of managing inventory of an organization. Under a…

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: Why do product-costing systems based on a single, volume-based cost driver tend to overcost…

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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: 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: Explain the behavioral problem that can result when cost-plus prices are based on variable cost.

A: Following is the answer to the given question

Q: what is the definition of fixed, variable, and mixed costs? Are variable costs or fixed costs easier…

A: Introduction: Cost accounting is a type of managerial accounting that capture a firm's production…