Which of the following describes the goal that should be pursued when setting transfer prices? Allow top management to become actively involved when calculating the proper dollar amounts. Minimize opportunity costs. Maximize profits of the buying division. Establish incentives for autonomous division managers to make decisions that are in the overall organization's best interests (i.e., goal congruence). Maximize profits of the selling division.

Which of the following describes the goal that should be pursued when setting transfer prices? Allow top management to become actively involved when calculating the proper dollar amounts. Minimize opportunity costs. Maximize profits of the buying division. Establish incentives for autonomous division managers to make decisions that are in the overall organization's best interests (i.e., goal congruence). Maximize profits of the selling division.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter1: Introduction To Managerial Accounting

Section: Chapter Questions

Problem 7MCQ

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Similar questions

What is customer value? How is customer value related to a cost leadership strategy? To a differentiation strategy? To strategic positioning?
Discuss the types of transfer pricing policy available to a company and explain why a company needs to consider the motivational impact on the managers of its divisions when setting the transfer price.
The primary objective of a transfer pricing system/scheme/policy is to motivate segment managers to make decisions that are aligned with the overall goals of the company. True or False
Which responsibility center's manager would be most concerned about the segment's return on investment? a. Revenue center b. Profit center c. Investment center d. Cost center
What is Return On Investment? Analyze the use of ROI and the impact that it has within an organization. What are the pros and cons of it? Please explain.
Discuss how using the rate of return on investment (ROI), as an evaluation tool, helps facilitate comparabilitybetween the various departments or divisions of a business?
Differentiate between centralized and decentralized operations. Also, differentiate between a profit center and an investment center.
Which of the following is not an objective or potential advantage of transfer pricing? A) A realistic measurement of performance of each division B) A reduction in goal congruence between divisions and overall company C) More autonomy and motivation for divisional managers D) The maximisation of company profits
A comprehensive management control system that considers both financial and nonfinancial measures relating to a company’s critical success factors is called a(n): a. Balanced scorecard system. b. Economic value added system. c. Activity-based costing system. d. Market value added system.
Which statement below best describes a profit center?a. The authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply.b. The authority to make decisions affecting the major determinants of profit, including the power to choose its markets, sources of supply, and significant control over the amount of invested capital.c. The authority to make decisions over the most significant costs of operations, including the power to choose the sources of supply.d. The authority to provide specialized support to other units within the organization.e. The responsibility for combining the raw materials, direct labor, and other factors of production into a final product.
Evaluate the performance of the two divisions assuming UEI uses return on investment (ROI).
Instructions: Designate the best answer for each of the following questions. 1.Which of the following is a responsibility center that incurs expenses, generates revenues, and is responsible for generating a return on assets? a. Cost center b. Revenue center c. Profit center d. Investment center 2.Which one of the following is the most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center? a. Contribution margin b. Contribution net income c. Contribution gross profit d. Controllable margin 3.Hanover Corporation desires to earn target net income of $42,000. The selling price per unit is $18, unit variable cost is $5.60, and total fixed costs are $123,912. How many units must the company sell to earn its target net income? a. 13,380 b. 9,993 c. 3,387 d. 9,217 4.Remark…