Negotiated transfer prices are often employed when

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Multiple Choice

Negotiated transfer prices are often employed when

a. market prices are stable.

b. market prices are volatile.

c. market prices change by a regular percentage each year.

d. goal congruence is not a major objective.

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A transfer-pricing method leads to goal congruence when

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Multiple Choice

A transfer-pricing method leads to goal congruence when

a. managers always act in their own best interest.

b. managers act in their own best interest and the decision is in the long-term best interest of the manager's subunit.

c. managers act in their own best interest and the decision is in the long-term best interest of the company.

d. managers act in their own best interest and the decision is in the short-term best interest of the company.

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Transfer prices should be judged by

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Multiple Choice

Transfer prices should be judged by

a. whether they promote goal congruence.

b. whether they promote the balanced scorecard method.

c. whether they promote a high level of subunit autonomy in decision making.

d. both (a) and (c).

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A product may be passed from one subunit to another subunit in the same organization

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Multiple Choice

A product may be passed from one subunit to another subunit in the same organization. The product is known as

a. an interdepartmental product.

b. an intermediate product.

c. a subunit product.

d. a transfer product.

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The benefits of a decentralized organization are greater when a company

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Multiple Choice

The benefits of a decentralized organization are greater when a company

a. is large and unregulated.

b. is facing great uncertainties in their environment.

c. has few interdependencies among division.

d. is all of the above

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An area which is usually appropriate for decentralized decision making is

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Multiple Choice

An area which is usually appropriate for decentralized decision making is

a. sources of supplies and materials.

b. long-term financing.

c. product advertising.

d. both (a) and (c).

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Which of the following statements is FALSE

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Multiple Choice

Which of the following statements is FALSE?

a. There is a cause-and-effect relationship between the cost driver and the level of activity

b. Fixed costs have cost drivers over the short run

c. Over the long run all costs have cost drivers

d. Volume of production is a cost driver of direct manufacturing costs

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