When an outside market exists for an intermediate product that is perfectly competitive, the ideal method...
When an outside market exists for an intermediate product that is perfectly competitive, the ideal method of transfer pricing is generally
A) the one that creates the highest margin to the selling unit
B) the price at which the product sells in the external market
C) one that is higher than what the outside market is quoting
D) based on management accounting numbers
Homework Answers
Answer : b
Explanation: market based transfer ensures that the selling division is not penalised by the purchasing division purchase outside. However if there is any excess capacity in the selling division,the company may want to require internal purchase so as long as the selling division meets the market price.
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When an outside market exists for an intermediate product that
is perfectly competitive, the ideal method...
Given a competitive outside market for identical intermediate goods, what is generally considered the best transfer...
Given a competitive outside market for identical intermediate goods, what is generally considered the best transfer price, assuming all Multiple Choice Average cost of production Average cost of production, plus average production department allocated profit. Market price of the intermediate goods. O Market price of the intermediate goods, less average production department allocated profit O Full cost, plus a mark-up for profit.
A firm sells its product in a perfectly competitive market where other firms charge a price...
A firm sells its product in a perfectly competitive market where other firms charge a price of $80 per unit. The firm’s total costs are 20+2Q+Q2. The profit-maximizing output for your firm is: 202Q+Q2
Help Save & Exit Submit A perfectly competitive firm finds that the market price for its...
Help Save & Exit Submit A perfectly competitive firm finds that the market price for its product is $20. It has a fixed cost of $100 and a variable cost of $10 per unit for the first 50 units and then $25 per unit for all successive units. Instructions: Enter your answers as whole numbers a. Does price equal or exceed average variable cost for the first 50 units? (ICick to select) What about for the first 100 units?Cck to...
4. Prices are set by the competitive market when a. the product is specially made for...
4. Prices are set by the competitive market when a. the product is specially made for a customer. b. there are no other producers capable of manufacturing a similar item. c. a company can effectively differentiate its product from others. d. a product is not easily distinguished from competing products. All of the following are factors that can affect pricing decisions except a. cost considerations. b. demand. c environment. d. All of these are factors. Why are budgets useful in...
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Capacity in units Selling price to outside customers on the intermediate market Variable costs per unit Fixed costs per unit (based on capacity) 270,000 $20 $ 12 $ 9 The company has a Pump Division that could use this valve in the manufacture of one of its pumps. The Pump Division is currently purchasing 15,000 valves per year from an overseas supplier at a cost of $19 per valve 1. Assume that the Valve Division has ample idle capacity to...
Use the following data to answer the questions that follow. Assume a perfectly competitive product market...
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2. A firm sells its product in a perfectly competitive market where other firms charge a...
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3.) A firm sells its product in a perfectly competitive market where other firms charge a...
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Suppose that some firms in a perfectly competitive market are making positive economic profits. Which one...
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Given a competitive outside market for identical intermediate goods, what is generally considered the best transfer price, assuming all Multiple Choice Average cost of production Average cost of production, plus average production department allocated profit. Market price of the intermediate goods. O Market price of the intermediate goods, less average production department allocated profit O Full cost, plus a mark-up for profit.
Help Save & Exit Submit A perfectly competitive firm finds that the market price for its product is $20. It has a fixed cost of $100 and a variable cost of $10 per unit for the first 50 units and then $25 per unit for all successive units. Instructions: Enter your answers as whole numbers a. Does price equal or exceed average variable cost for the first 50 units? (ICick to select) What about for the first 100 units?Cck to...
4. Prices are set by the competitive market when a. the product is specially made for a customer. b. there are no other producers capable of manufacturing a similar item. c. a company can effectively differentiate its product from others. d. a product is not easily distinguished from competing products. All of the following are factors that can affect pricing decisions except a. cost considerations. b. demand. c environment. d. All of these are factors. Why are budgets useful in...
Capacity in units Selling price to outside customers on the intermediate market Variable costs per unit Fixed costs per unit (based on capacity) 270,000 $20 $ 12 $ 9 The company has a Pump Division that could use this valve in the manufacture of one of its pumps. The Pump Division is currently purchasing 15,000 valves per year from an overseas supplier at a cost of $19 per valve 1. Assume that the Valve Division has ample idle capacity to...
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