The Case of Hyperinflation in Zimbabwe in the Late 2000s

question 82

Multiple Choice

The case of hyperinflation in Zimbabwe in the late 2000s was an example of the effects of:

• A) the government monetizing its debt.
• B) large rainfall shocks.
• C) amplification mechanisms.
• D) a lack of foreign aid.

Calculate divisional performance using residual income.

Analyze the impact of internal transactions on divisional and overall company profitability.

Determine the appropriate cost allocation for shared services between different parts of an organization.

Understand the concept of transfer pricing and its impact on divisional profitability.

---

Definitions:

Moving Average Method

The Moving Average Method is an inventory costing method that calculates the average cost of inventory by taking the average of the costs of goods available for sale.

Inventory Transaction

This term refers to any event that causes a change in the quantity or value of inventory held by a business.

Purchased Units

The quantity of goods acquired by a company for resale or use in production during a specific accounting period.

Periodic FIFO

A method in inventory valuation where goods are assumed to be sold in the order they were acquired, calculated periodically.