NEW MyLab Accounting with Pearson eText -- Access Card -- for Cost Accounting
15th Edition
ISBN: 9780133451474
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 22, Problem 22.14Q
“Under the general guideline for transfer pricing, the minimum transfer price will vary depending on whether the supplying division has unused capacity or not.” Do you agree? Explain.
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“Under the general guideline for transfer pricing, the minimum transfer price will vary depending on whether the supplying division has unused capacity or not.” Do you agree? Explain.
Should transfers be made to division B if there is no unused capacity in division A? Is the market price the correct transfer price? Show your computations.
Calculate the lowest acceptable transfer price for the seller (Division A) ?
Chapter 22 Solutions
NEW MyLab Accounting with Pearson eText -- Access Card -- for Cost Accounting
Ch. 22 - Prob. 22.1QCh. 22 - Describe three criteria you would use to evaluate...Ch. 22 - What is the relationship among motivation, goal...Ch. 22 - Name three benefits and two costs of...Ch. 22 - Organizations typically adopt a consistent...Ch. 22 - Transfer pricing is confined to profit centers. Do...Ch. 22 - What are the three methods for determining...Ch. 22 - What properties should transfer-pricing systems...Ch. 22 - All transfer-pricing methods give the same...Ch. 22 - Prob. 22.10Q
Ch. 22 - Prob. 22.11QCh. 22 - Prob. 22.12QCh. 22 - Prob. 22.13QCh. 22 - Under the general guideline for transfer pricing,...Ch. 22 - How should managers consider income tax issues...Ch. 22 - Prob. 22.16ECh. 22 - Prob. 22.17ECh. 22 - Prob. 22.18ECh. 22 - Prob. 22.19ECh. 22 - Prob. 22.20ECh. 22 - Prob. 22.21ECh. 22 - Prob. 22.22ECh. 22 - Prob. 22.23ECh. 22 - Prob. 22.24ECh. 22 - Prob. 22.25ECh. 22 - Prob. 22.26ECh. 22 - Prob. 22.27PCh. 22 - Prob. 22.28PCh. 22 - Prob. 22.29PCh. 22 - Prob. 22.30PCh. 22 - Prob. 22.31PCh. 22 - Prob. 22.32PCh. 22 - Prob. 22.33PCh. 22 - Prob. 22.34PCh. 22 - Prob. 22.35PCh. 22 - Prob. 22.36P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- If an outside, perfectly competitive market exists for the intermediate product, what should the transfer price be? Why?arrow_forwardDiscuss the advantages and disadvantages of a negotiated transfer pricing approach.arrow_forwardDiscuss the advantages and disadvantages of a market-based transfer pricing approach.arrow_forward
- A transfer pricing arrangement that uses the price that would be charged to an external customer is a______. A. market-based approach B. negotiated approach C. cost approach D. decentralized approacharrow_forwardA transfer pricing structure that considers the opportunity costs of selling to internal rather than external customers uses_______. A. the cost approach B. the general transfer pricing approach C. the market-based approach D. the opportunity cost approacharrow_forwardWhat would be the transfer price if Division X uses full absorption cost plus markup?arrow_forward
- What is one potential limitation of full-cost-based transfer prices?arrow_forwardWhat is the minimum of the transfer price range for a transfer between the two divisions?arrow_forwardSelect Among the choices, this transfer prices basis is considered as the most inferior one: a. variable cost transfer pice b. full cost transfer price c. negotiatied transfer price d. external market transfer price e. dual transfer pricearrow_forward
- “Transfer pricing is confined to profit centers.” Do you agree? Explain.arrow_forwardWhen the selling division is a full capacity, the goal congruent transfer price will be the: market price actual full cost actual variable cost standard full cost actual variable cost plus markuparrow_forwardWhich is the best description of a dual transfer price? A) The receiving division is charged the market value of the item transferred while the supplying division is credited with the standard variable cost B) The receiving division is credited the market value of the item transferred while the supplying division is charged with the standard variable cost C) The receiving division is charged the standard variable cost transferred while the supplying division is credited with the market value of the item D) The receiving division is credited the standard variable cost transferred while the supplying division is charged with the market value of the itemarrow_forward
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