10
Transfer Pricing
Chapter Outline
A.<Tab/>Cost Management Challenges - Chapter 19 provides four cost management challenges.
1.<Tab/>What is the primary purpose of establishing a transfer price policy?
2.<Tab/>What are four methods for setting transfer prices?
3.<Tab/>What is the significance of excess capacity in the transferring division, and what impact does that have on the transfer price?
4.&…
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…the above.
<Tab/>Answer: d<Tab/><Tab/>Learning Objective: 4
11.<Tab/>US division's profit after tax using variable costs for transfer pricing amounts to
a.<Tab/>$39,200
b.<Tab/>$-39,200
c.<Tab/>$53,550
d.<Tab/>$-53,550
e.<Tab/>None of the above.
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