Which of the following is a legitimate disadvantage of a 100%-of-variable-cost transfer pricing?

a)This price will not allow the selling division to make a long-run profit.

B)This price will discourage the purchasing division from buying internally.

C)At this price, if the selling division does not have excess capacity, the selling division will not wish to sell anything to the outside market.

D)

if the selling division has excess capacity, this transfer price will often lead the purchasing division to act inconsistently with corporate goals. Which of the following is an anticipated result of implementing a just-in-time management philosophy?

A)A smaller number of raw material orders will be placed.

b)Inventory carrying costs will be lowered.

c)The purchasing manager will have an increased role in ordering raw materials.

D)Inventory carrying costs will be eliminated.

The term "division margin" is used to describe the:

a)Excess of manufacturing margin over all variable expenses

b)Sum of division cost of goods sold and net income

c)Amount a given division contributes toward covering common corporate expenses

d)Excess of division sales over its variable manufacturing expenses

A division that has a net loss and is expected to continue to have losses for the foreseeable future:

a)Should be abandoned if its division margin is negative

b)Will increase net income for the company if the division is abandoned, only if all other divisions are showing profits

c)Will increase net income for the company if the division is abandoned, only if corporate income is negative

d)Will invariably increase net income for the company if the division is abandoned