Transfer Prices Based on Actual Costs of the Selling Division

question 103

Multiple Choice

Transfer prices based on actual costs of the selling division as opposed to standard costs incurred by that division:

• A) Are preferred by the purchasing division.
• B) May fail to provide the selling division with an incentive to control costs.
• C) Often encourage the selling division to control costs.
• D) Are required by international financial reporting standards.
• E) Often encourage the purchasing division to control costs.

Understand the optimum resource mix for a firm and how it is determined.

Examine the influence of productivity and the price of final products on resource demand.

Discuss the concepts of substitution and output effects in resource employment.

Evaluate the impact of market and economic changes on the demand for labor and resources.

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuer, which has little relation to its market price.

Issued

The act of officially distributing or making something available, such as a public statement, document, currency, or security.

MBCA

Model Business Corporation Act, a template for state corporation statutes that provides legal guidelines for corporate governance and operations.

Articles of Incorporation

Legal documents filed with the state government to legally establish a corporation.