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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