A Division of Sarge Company Is Located in a Country

question 87

Multiple Choice

A division of Sarge Company is located in a country that places restrictions on the amount of funds that may be paid as dividends to foreign owners.If Sarge Company wishes to maximize the amount of cash received from the foreign division, Sarge Company should establish a _____.

• A)high transfer price of goods transferred out of the country
• B)high transfer price of goods transferred into the country
• C)low transfer price of goods transferred out of the country
• D)low transfer price of goods transferred into the country

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Definitions:

Total Revenue

The entire amount of income generated by the sale of goods or services, before any expenses are deducted.

Variable Costs

Costs that vary in direct proportion to the volume of output or production in a company.

Variable Costs

Costs that vary directly with the level of production or service delivery.

Fixed Costs

Expenses that do not change with the level of output or sales, such as rent, salaries, and insurance.