30. What transfer pricing mechanism generally applies a normal markup to costs as a surrogate for market prices when intermediate market prices are not available?

a. Fixed price-based transfer pricing

b. Full-absorption costing

c. Activity-based costing

d. Cost-plus transfer pricing

31. Because tax rates are different in different countries, companies have incentives to set transfer prices that will

a. increase revenues in low-tax countries and increase costs in high-tax countries.

b. increase costs in low-tax countries and increase revenues in high-tax countries.

c. decrease costs in high-tax countries and decrease revenues in low-tax countries.

d. None of the answers is correct.

32. In calculating return on investment (ROI), when measuring the investment base most firms use

a. acquisition cost.

b. net book value.

c. replacement cost.

d. MCRS depreciated value.

33. A shortcoming of return on investment (ROI) is that it may not lead managers to accept good investment opportunities if

a. ROI of the investment is higher than the present ROI of the division.

b. the ROI of the investment is the same as the present ROI of the division.

c. the ROI of the investment is lower than the present ROI of the division.

d. None of the answers is correct.