A Firm Has a Division That Produces X,whose Total Costs

question 24

Multiple Choice

A firm has a division that produces X,whose total costs are TC = 10 + Q² (where Q is the quantity of X) .The marketing division adds its own total costs of 5 + 3Q.In the competitive external market for X,the wholesale price is $10.The transfer price of X should be:

• A) $2.
• B) $5.
• C) $10.
• D) $12.
• E) $15.

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Definitions:

Purchase Discount

A deduction from the gross amount of an invoice allowed by the seller to the buyer for early payment.

Sales Taxes

Taxes imposed by governments on sales of goods and services, collected by the retailer at the point of sale and passed on to the government.

Revenue

The increase in assets or decrease in liabilities resulting from the sale of goods or the performance of services in the normal course of business.

ASPE

Accounting Standards for Private Enterprises; a set of accounting policies and procedures specifically for private companies in Canada.