FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 9: Pricing

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

True/False

Review LaterAdd Note

Review Later

Using the negotiated transfer pricing approach, a minimum transfer price is established by the selling division.

Correct Answer

verified

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

The transfer price approach that conceptually should work the best is the

A) cost-based approach.
B) market-based approach.
C) negotiated price approach.
D) time and material pricing approach.

Correct Answer

verified

Show Answer

Question 3

Multiple Choice

Review LaterAdd Note

When a cost-based transfer price is used, the transfer price may be based on any of the following except

The first step in the absorption cost approach is to calculate the mark-up percentage used in setting the target selling price.

In most cases, prices are set by the

The last step in determining the material loading charge percentage is to

In a competitive market, a company is forced to act as a price taker and must emphasize minimizing and controlling costs.

Under the absorption cost approach, all of the following are included in the cost base except

The reasons for using the variable cost-plus approach include all of the following except this approach

Factors that can affect pricing decisions include all of the following except

The first step in the absorption cost approach is to calculate the

Use the following information to answer questions Division A produces a product that it sells to the outside market.It has compiled the following: -Division B of the same company is currently buying an identical product from an outside provider for $38 per unit.It wishes to purchase 5,000 units per year from Division A.Division A is currently selling 30,000 units of the product per year.If the internal transfer is made, Division A will not incur any selling costs.What would be the minimum transfer price per unit that Division A would be willing to accept?

Maggie Co.has variable manufacturing costs per unit of $20, and fixed manufacturing cost per unit is $15.Variable selling and administrative costs per unit are $4, while fixed selling and administrative costs per unit $6.Maggie desires an ROI of $7.50 per unit.If Maggie Co.uses the absorption cost approach, what is its mark-up percentage?

Why is transfer pricing important?

The transfer price approach that is often considered the best approach because it generally provides the proper economic incentives is the

If a cost-based transfer price is used, the transfer price must be based on variable cost.

Under the variable cost-plus approach, the cost base consists of all of the variable costs associated with a product except variable selling and administrative costs.

Use the following information for questions The following data are available for Wheels 'N Spokes Repair Shop for 2012: The desired profit margin is $15 per labour hour.The material loading charge is 35% of invoice cost.It is estimated that 4,000 labour hours will be worked in 2012. -In March 2012, Wheels 'N Spokes repairs a bicycle that takes three hours to repair and uses parts of $70.The bill for this repair would be

The first step for time and material pricing is to calculate the material loading charge.

Cuff budgets sales of its truck tires at $160 per tire and estimates that 10,000 tires can be sold during the coming year.Variable costs per tire are $60 and Cuff desires a profit of $30 per tire.The target cost per tire is