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The Thompson Company Uses Standard Costing and Has Established the Following

question 61

Multiple Choice

The Thompson Company uses standard costing and has established the following direct material and direct labor standards for each unit of Lept.

Direct materials: 2 gallons at $4 per gallon
Direct labor: 0.5 hours at $8 per hour

During September, the company made 6,000 Lepts and incurred the following costs:

Direct materials purchased: 13,400 gallons at $4.10 per gallon
Direct materials used: 12,600 gallons
Direct labor used: 2,800 hours at $7.65 per hour

-The materials price variance for September was:

Identify the factors affecting transfer price settings, including tax implications and divisional capacities.

Evaluate the impact of transfer pricing strategies on divisional and organizational performance.

Analyze the role of negotiation in transfer pricing and its impact on divisional relationships.

Distinguish between direct and opportunity costs in the context of transfer pricing.

Definitions:

Suspensory Ligaments

Fibrous tissues that support an organ or structure, such as the ligaments supporting the lens of the eye, allowing it to change shape for focusing.

Ciliary Muscles

A group of muscles located in the eye that adjust the lens shape to help focus light on the retina.

Lens

A transparent, biconvex structure in the eye that focuses light rays onto the retina, enabling clear vision.

11-cis-retinal

A form of vitamin A that plays a key role in the photoreception process by changing shape when it absorbs light.