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Exam 13: Responsibility Accounting, support Department Allocations, and Transfer Pricing

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Question 31

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External factors considered in setting transfer prices in multinational firms typically do not include

A) the corporate income tax rates in host countries of foreign subsidiaries.
B) foreign monetary exchange risks.
C) environmental policies of the host countries of foreign subsidiaries.
D) actions of competitors of foreign subsidiaries.

E) A) and B)
F) A) and C)

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Question 32

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Service departments provide functional tasks for which of the following?

A) no no
B) yes no
C) no yes
D) yes yes

E) A) and B)
F) A) and C)

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Question 33

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Walton Corporation Walton Corporation has two service departments: Data Processing and Administration/Personnel.The company also has three divisions: X,Y,and Z.Data Processing costs are allocated based on hours of use and Administration/Personnel costs are allocated based on number of employees. Assume that Data Processing provides more service than Administration/Personnel. Refer to Walton Corporation.Assume that Data Processing costs have been allocated and the balance in Administration is $600,000.Using the step method,what amount is allocated to Y?

Can the performance evaluation measures (for autonomous subunit managers)create goal congruence problems in transfer pricing situations? Explain.

An automotive company has three divisions.One division manufactures new replacements parts for automobiles,another rebuilds engines,and the third does repair and overhaul work on a line of trucks.All three divisions use the services of a central payroll department.The best method of allocating the cost of the payroll department to the various operating divisions is

What term identifies an accounting system in which the operations of the business are broken down into reportable segments,and the control function of a foreperson,sales manager,or supervisor is emphasized?

As the internal transfer price is increased,

If a division is set up as an autonomous profit center,then goods should not be transferred

An organizational unit that provides specific tasks for other internal units is referred to as a(n)______________________________.

The manager of a profit center has the ability to set selling prices.

Decentralization means that a unit manager has the authority to make all decisions concerning that specific unit.

One of the main factors to consider when using a cost-based transfer price is whether to use actual or standard costs.

Grant Corporation Grant Corporation distributes its service department overhead costs directly to producing departments without allocation to the other service departments.Information for January is presented here. Refer to Grant Corporation.The amount of Utilities Department costs distributed to Dept.B for January should be (rounded to the nearest dollar)

A rational and systematic allocation base for service department costs should reflect the cost accountant's consideration of all of the following except

All of the following objectives are reasons that service department allocations can motivate managers except to

Oller Corporation Oller Corporation produces various products used in the construction industry.The Plumbing Division produces and sells 100,000 copper fittings each month.Relevant information for last month follows: Top-level managers are trying to determine how a transfer price can be set on a transfer of 10,000 of the copper fittings from the Plumbing Division to the Bathroom Products Division. Refer to Oller Corporation.If the Plumbing Division is operated as an autonomous investment center and its capacity is 100,000 fittings per month,the per-unit transfer price is not likely to be below

When the majority of authority is maintained by top management personnel,the organization is said to be

Responsibility reports reflect the flow of information from operational units to top management.

In a decentralized company in which divisions may buy goods from one another,the transfer pricing system should be designed primarily to

The cost object under the control of a manager is called a(n) ____ center.