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Accounting: What the Numbers Mean9th EditionDaniel F Viele, David H Marshall, Wayne W McManus 345 solutions Financial Accounting13th EditionCarl S Warren, James M Reeve, Jonathan E. Duchac 290 solutions Intermediate Accounting17th EditionDonald E. Kieso, Jerry J. Weygandt, Terry D. Warfield 2,603 solutions Financial Accounting16th EditionCarl S Warren, Christine Jonick, Jennifer Schneider 517 solutions 56.Cost-based transfers frequently include a normal markup to the costs as a surrogate forA)negotiated market prices.B)opportunity costs.C)differential costs.D)market prices.Answer: DDifficulty: SimpleLearning Objective: 3 AACSB: Analytic57.In a decentralized company in which divisions may buy goods from one another, the transferpricing system should be designed primarily toDifficulty: ModerateLearning Objective: 3 Lanen, Anderson, MaherFundamentals of Cost Accounting,2e398 AACSB: Analytic58.Given a competitive outside market for identical intermediate goods, what is the BEST transferprice, assuming all relevant information is readily available?Difficulty: SimpleLearning Objective: 3 AACSB: Analytic59.Multinational firms often face conflicting pressures when developing transfer pricing policies.Tax avoidance results whenDifficulty: ModerateLearning Objective: 4 AACSB: Analytic60.Which of the following statements is not true regarding the companies that responded to the Ernst& Young survey discussed in the book?A)85% consider transfer pricing their most important international tax issue.B)77% use the same transfer prices for both tax reporting and management control.C)92% consider transfer pricing as a part of the company's strategic planning process.D)50% of the companies completing a merger or acquisition adopted the dominant company'stransfer pricing policy.Answer: CDifficulty: SimpleLearning Objective: 4 AACSB: Analytic61.Which of the following transfer pricing methods must be used by the oil and gas industry?Difficulty: SimpleLearning Objective: 5 AACSB: AnalyticPart B:Computational QuestionsTest Bank,Chapter 15399 What is costCost-based transfer pricing is a method of setting prices when selling products to divisions within the same company. Several factors affect the price, including: Production costs. Managers' reviews. Taxation.
What are the three basic prices that can be used in a transfer?Generally, companies can determine transfer prices three different ways: market-based transfer prices, cost- based transfer prices, and negotiated transfer prices.
What are the four bases for setting a transfer price?Market, administered, costing and negotiation are the four grounds for determining the transfer price for providing under-processing goods by one department of a company to another. These are the factors that a company has to consider before determining the cost of transferring goods within a company's premises.
What is costWhat is cost-based pricing? Cost-based pricing is a pricing method that is based on the cost of production, manufacturing, and distribution of a product. Essentially, the price of a product is determined by adding a percentage of the manufacturing costs to the selling price to make a profit.
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Cost based transfers frequently include a normal markup to the costs as a surrogate for
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