Which of the Following Is a Disadvantage of Dual Pricing

question 119

Multiple Choice

Which of the following is a disadvantage of dual pricing?

• A) It strongly preserves the autonomy of divisions, and the division managers are motivated to put forth effort to increase the operating income of their respective divisions, causing inefficiencies.
• B) The price arrived by using dual pricing has no specific relationship to either costs or the market price.
• C) It leads to disputes about which price should be used when computing the taxable income of subunits located in different tax jurisdictions.
• D) It assumes that the minimum transfer price equals the incremental cost per unit incurred up to the point of transfer minus the opportunity cost per unit to the selling division.

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Definitions:

New Imperialism

An era of overseas expansion by European countries, the United States, and Japan in the late 19th and early 20th centuries.

Second Industrial Revolution

A phase of rapid industrialization in the final third of the 19th century and the beginning of the 20th, known for advancements in steel production, electricity, and chemical synthesis.

Scramble for Africa

The rapid colonization of Africa by European powers during the late 19th and early 20th centuries, driven by economic interests, political competition, and cultural motives.

J.A.Hobson

An English economist and social scientist best known for his critique of imperialism and his theory on the economic roots of imperialism.