2. Which of the following transfer prices is most likely the "fairest" (for both the selling division and buying division) because it provides the best measure of the opportunity cost of inter-divisional transfers? Variable cost-based transfer prices. b. Full cost-based transfer prices. Market-based transfer prices. a. C. 3. The absolute minimum price that the selling division would accept from an inter-company transfer is: a. The variable cost of the units transferred plus the opportunity cost of the transfer. b. The full cost of the units transferred plus the opportunity cost of the transfer C. The normal selling price of the item plus the opportunity cost of the transfer. d. The normal selling price of the item less the opportunity cost of the transfer. 4. Ideally, the best performance measures: a. Reflect the decision rights assigned to the individual/organizational unit. b. Yield information about the decisions or actions of the individualorganizational unit. c. Have low measurement error. d. Are easy to understand and communicate. e. All of the above. 5. The benefits of decentralization (i.e. delegation and assignment of decision rights) include all of the following except: a. It forces top levels of management to focus on individual units. b. It empowers more employees at lower levels of management. c. It allows for better and more timely decision making. d. It trains future managers. 6. Agency problems arise in the case of decentralization related to: a. The fact that local managers have private information. b. The fact that senior management cannot observe local manager effort (i.e., "hidden action"). c. Both A. and B. d. Neither A. or B. 7. Generally speaking, a "noisier" performance measure places less risk on the employee being evaluated using the performance measure. a. True b. False 8. When choosing a performance measure to evaluate an employee, the performance measure should a. Be a measure the employee can manipulate b. Be related to factors the employee can control c. Not be used to determine annual bonuses if it helps align the employee goals with that of the company d. All of the above