All of the Following Are Correct Statements About the Cost-Based

question 84

Multiple Choice

All of the following are correct statements about the cost-based transfer price approach EXCEPT that it

• A)can understate the actual contribution to profit by the selling division.
• B)can reduce a division manager's control over the division's performance.
• C)bases the transfer price on standard cost instead of actual cost.
• D)provides incentive for the selling division to control costs.

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Definitions:

Deficit Spending

The practice of spending more money than is taken in through revenues, leading to a government budget deficit, often financed by borrowing.

Demobilized Soldiers

Military personnel who are discharged back into civilian life after their service, often following the end of a war or military conflict.

Unemployment

The situation when individuals who are capable of working and are actively seeking employment are unable to find a job.

World War

World War usually refers to one of the two global military conflicts of the 20th century, either from 1914 to 1918 or from 1939 to 1945, involving many of the world's nations.