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:

Asymmetric Information

A situation in financial markets where one party has more or better information than the other, usually leading to an unfair advantage.

Medical Insurance

A type of insurance coverage that pays for medical and surgical expenses incurred by the insured.

Issuance of Credit Cards

The process by which a bank or credit card company provides a consumer with a credit card, enabling them to borrow funds for purchases or cash advances.

Optimal Choice

Optimal Choice refers to the best possible decision or selection based on given criteria, constraints, and available options to maximize desired outcomes or benefits.