Responsibility Accounting and Performance Measures Paper 12


Kern Manufacturing has several divisions and evaluates performance using segment income. Since sales include transfers to other divisions, Kern has established a price for internal sales as cost plus 10%. Red Division has requested 10,000 units of Green Divisionís product. Green Division is selling its product externally at a 60% markup over cost. The corporate policy will encourage the Green Division to


Happy Time Industries uses segment reporting for all of its decentralized divisions. It has several products that are transferred from one division to other divisions. Happy Time wants to motivate the manager of the selling division to produce efficiently. Assuming the following methods are available, the optimal transfer pricing method should be a


Morrisonís Plastics Division, a profit center, sells its products to external customers as well as to other internal profit centers. Which one of the following circumstances would justify the Plastics Division selling a product internally to another profit center at a price that is below the market-based transfer price?


If a company allocates common costs by weighting the costs of each user as a separate entity, it is using which one of the following cost allocation methods?


Advantages of the full-cost method for determining transfer prices include all of the following except that it


An advantage of using a cost-based transfer price is that it


Cogwin, Inc., operates under a decentralized structure. Cogwinís Western Division plans to purchase a needed component from the Eastern Division that is operating at capacity. Eastern incurs relevant costs of $4 to manufacture the component and $1 to ship each unit, and it can sell the unit externally at a price of $8 per unit. The Western Division incurs costs of $9 per unit and sells the finished goods for $18 each. According to the general guideline for transfer-pricing situations, the minimum transfer price per unit should be


What is the most important purpose of a balanced scorecard?


Which of the following is not one of the four perspectives of the balanced scorecard?


The balanced scorecard generally uses performance measures with four different perspectives. Which of the following performance measures would be part of those used for the internal business processes perspective?


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