Transfer Pricing Flashcards

1
Q

What is the definition of a transfer price?

A The price of selling goods across divisions within the same company

B The price of selling goods outside the company

C The price to deliver goods and services overseas

D The price of moving resources within a division

A

A

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2
Q

Which of the following is the key consideration when setting a transfer price?

A Sunk cost

B Overhead cost

C Fixed cost

D Opportunity cost

A

D

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3
Q

Which of the following factors may lead a division to set a low transfer price?

A When the opportunity cost is high

B When the division is below capacity

C When the division is at capacity

D When the division has high variable costs

A

B

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4
Q

Which of the following is typically NOT used by companies to set a transfer price?

A Variable cost

B Fixed cost

C Full cost

D Full cost plus profit

A

B

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5
Q

Each of the following is an important consideration for transfer pricing EXCEPT:

A Taxation

B Total company profitability

C Investments returns

D Division profitability

A

C

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