21)

The following data are available for Oriole Repair Shop for 2022: Repair technician's wages Fringe benefits Overhead Total $105000 67000 88000 $260000 The desired profit margin is $11 per labour hour. The material loading charge is 35% of invoice cost. It is estimated that 4000 labour hours will be worked in 2020. In March 2022, Oriole repairs a bicycle that takes three hours to repair and uses parts of $65. The bill for this repair would be O $315.75. $271.75. $238.75. $282.75

22)

A firm's transfer pricing policy should accomplish all of the following except O provide accurate performance evaluation. O promote goal congruence. O maintain divisional autonomy. maximize the taxes paid in a foreign country.

23

The transfer price approach that is often considered the best approach because it generally provides the proper economic incentives is the market-based approach. O cost-based approach. O negotiated price approach. time-and-material pricing approach

24)Division A produces a product that it sells to the outside market. It has compiled the following: Variable manufacturing cost per unit Variable selling costs per unit Total fixed manufacturing costs Total fixed selling costs Per unit selling price to outside buyers Capacity in units per year $10 $3 $150,000 $30,000 $40 30,000 Type here to search Division B of the same company is currently buying an identical product from an outside provider for $38 per unit. It wishes to purchase 5,000 units per year from Division A. Division A is currently selling 25,000 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. At what price would the internal transfer occur? At the maximum price that is acceptable to Division B. O At the lowest price that is acceptable to Division A.

25)What would be a legitimate reason for upper management to insist on an internal transfer even though the product could be sourced outside the company at a price that is lower than the company's variable cost? There is never a legitimate reason that justifies an internal transfer if a product can be sourced outside the company at a price that is lower than the company's variable cost. The company has excess capacity. Management is concerned that its manufacturing equipment will soon be obsolete, and it wants to get full use out of it before it happens. Management wants to ensure a secure supply of the product.

26)What should be the objective(s) of a firm's transfer pricing policy? O Develop a pricing system that facilitates good record keeping that is acceptable under GAAP. Ensure a secure source of inputs at the best price possible. O Promote goal congruence, while maintaining divisional autonomy so that accurate performance evaluation can be made. Develop a cooperative relationship between divisions, while maintaining enough competitiveness to ensure the survival of the firm.

27)Generally, a transfer of products between two divisions should take place if it O increases awareness within the company of activity in the various divisions. assists the management to evaluate performance of the divisions. O allows one division to benefit from technology developed in another division. O results in increased incremental income to the company as a whole.

28)In setting internal transfer prices, the minimum price that the selling division would accept is a price that will result in a profit to the purchasing division. O its variable cost of the product plus opportunity costs lost by the transfer. its variable cost plus an internal profit margin. a price that will result in a profit to the selling division.

29)In setting internal transfer prices, the maximum price that the purchasing division would accept is its variable cost of the product plus opportunity costs gained by the transfer. a price that will result in a profit to the purchasing division. its external cost to purchase the product. a price that will result in a profit to the selling division.

30)

The machining division of Cullumber International has a capacity of 2,170 units. Its sales and cost data are: Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Total fixed manufacturing overhead $ 85 30 7 187,300 The machining division is currently selling 1,970 units to outside customers, and the assembly division of Cullumber International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $7/unit. What should be the transfer price in order not to affect the machining division's current profit? (Round answer to 2 decimal places e.g. 5.25.) Minimum transfer price $