ACC650
Module 6 - Quiz - Internal Control and Transfer Pricing
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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
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