Use the Information Below to Answer the Following Question(s)

question 74

Multiple Choice

Use the information below to answer the following question(s) .Crush Company makes internal transfers at 180% of full cost.The Soda Refining division purchases 30,000 containers of carbonated water per day, on average, from a local supplier, who delivers the water for $30 per container via an external shipper.In order to reduce costs the company located an independent producer in Manitoba who is willing to sell 30,000 containers at $20 each, delivered to Crush Company's shipping division in Manitoba.The company's Shipping Division in Manitoba can ship the 30,000 containers at a variable cost of $2.50 per container and a full cost, based on practical capacity, of $4.00 per container.When the company's Manitoba shipping division ships for external customers is charges $6.00 per container.
-One reason companies use full-cost transfer pricing is that it provides relevant costs for

• A)long-run decisions even though poor short-run decisions may result.
• B)long-run decisions and for short-run decisions.
• C)short-run decisions but not for long-run decisions.
• D)short-run decisions at the expense of the company.
• E)long-run decisions and for employee staffing decisions.

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Definitions:

Collateral

Property or other assets that a borrower offers a lender to secure a loan.

Financing Statement

A financing statement is a document filed by a creditor to indicate a security interest in the property of the debtor for purposes of establishing priority claims.

Renewal

The process of making something valid for an additional period or restoring it to a fresh condition.

Buyer in the Ordinary Course of Business

A term that describes a purchaser who buys goods in good faith from a seller who routinely deals in such goods, without knowledge that the sale violates the rights of a third party.