Question
2.Transferpricesshouldnotbebasedonactualcostsbecause: A.inefficientproducingdivisionshavehighercostsofproduction,whichwouldbepassedonbybuyingdivisions. B.producingdivisionshavenoincentivestocontrolcosts. C.inefficientunitswithhighcostsofproductionhavenoopportunityforprofit. D.inefficientproducingdivisionshavehighercostsofproduction,whichwouldbepassedonbybuyingdivisionsANDproducingdivisionshavenoincentivestocontrolcosts.
2.Transferpricesshouldnotbebasedonactualcostsbecause:
A.inefficientproducingdivisionshavehighercostsofproduction,whichwouldbepassedonbybuyingdivisions.
B.producingdivisionshavenoincentivestocontrolcosts.
C.inefficientunitswithhighcostsofproductionhavenoopportunityforprofit.
D.inefficientproducingdivisionshavehighercostsofproduction,whichwouldbepassedonbybuyingdivisionsANDproducingdivisionshavenoincentivestocontrolcosts.
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Managerial Accounting
Authors: Carl S Warren, James M Reeve, Jonathan Duchac
12th Edition
