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

question 49

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:

Dust Boot

In a disc brake caliper, an accordion-type seal that protects the outside of the piston and the piston bore from debris. In a drum brake wheel cylinder, two dust boots protect the pistons.

Fixed Caliper

A type of brake caliper that does not move relative to the brake rotor and uses multiple pistons on both sides for clamping action.

Steering Knuckle

A pivotal component in a vehicle's steering system that connects the wheel and tire to the suspension system, allowing for steering movement.

Floating Calipers

A disc brake caliper that “floats,” or moves back and forth, on bolts in its mounting hardware when the brakes are applied.