1.Which of the following statements is true regarding the use of the operating profit margin as a performance measure?

A. It includes the asset that produced the income.

B. It ignores the asset that produced the income.

C. It is calculated as net income divided by sales.

D. It is calculated as sales divided by operating income.

E. None

2. All of the following are false about transfer pricing except:

A. Using negotiated transfer pricing is always the best approach.

B. The cost approach can base the transfer price on either the variable cost or full absorption cost.

C. Using the cost approach is always the best approach.

D. Companies should always use the selling divisions variable cost as the transfer price.

E. None

3. The cost plus approach is the best approach for establishing transfer prices for all companies . True or false

4. An organizational segment that is responsible for cost and revenues is know as:

A. A financing center

B. A profit center

C. A cost center

D. An investment center

E . None

5. A cost center is an organizational segment in which the manager is responsible for cost and revenues, but not investments in assets.

True or false