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Module_6___Quiz___Internal_Control_and_Transfer_Pricing_2.docx - Which of the following deshowing page 1-3 out of 3

1)
Which of the following describes the goal that should be pursued when setting
transfer prices?
Maximize profits of the buying division.
Maximize profits of the selling division.
Allow top management to become actively involved when calculating the proper
dollar amounts.
Establish
incentives
for
autonomous
division
managers
to
make
decisions
that
are
in
the
overall
organization's
best
interests
(i.e.,
goal
congruence).
Minimize opportunity costs.
2)
The amounts charged for goods and services exchanged between two divisions are
known as:
a.
opportunity costs.
transfer
prices.
standard variable costs.
residual prices.
target prices.
3)
Which of the following is an appropriate base to distribute the cost of
building depreciation to responsibility centers?
a.
Number of employees in the responsibility centers.
Budgeted sales dollars of the responsibility
centers.
Square feet occupied by the responsibility
centers. Budgeted net income of the responsibility
centers.
Total budgeted direct operating costs of the responsibility centers
4)
Which of the following bodies oversees audits and auditors, and sanctions firms
and individuals for violations of laws and regulations?
American Institute of Certified Public Accountants (AICPA).
American Accounting Association (AAA).
Public Company Accounting
Oversight Board (PCAOB).
Financial Accounting Standards Board (FASB).
Accounting Principles Board (APB).
5)
Sunrise Corporation has a return on investment of 15%. A Sunrise division, which
currently has a 13% ROI and $750,000 of residual income, is contemplating a massive
new investment that will (1) reduce divisional ROI and (2) produce $120,000 of
residual income. If Sunrise strives for goal congruence, the investment:
a.
should not be acquired because it reduces divisional ROI.
should not be acquired because it produces $120,000 of residual income.
should not be acquired because the division's ROI is less than the corporate ROI
before the investment is considered.
should be acquired because it produces $120,000 of residual income for
the division.
should
be
acquired
because
after
the
acquisition,
the
division's
ROI
and
residual
income
are
both positive
numbers.