A Division of Sarge Company Is Located in a Country

question 3

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:

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

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Definitions:

Fair Labor Standards Act

A US federal law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers.

Minimum Wage

The lowest legal hourly pay for workers, as mandated by government regulation, intended to ensure a basic standard of living for employees.

Overtime

Refers to hours worked above the normal 40-hour workweek, for which there is usually a pay premium.

Above-Market Compensation

Compensation that exceeds the average pay levels in the relevant industry or sector.