In a potential transfer price situation, if the supplying division is operating at capacity in making sales to outside customers, it should be required to accept a transfer price that would lower its overall profitability, because doing so will increase total firm profitability.
Answer the following statement true (T) or false (F)
False
If the supplying division is operating at capacity, it would not accept a transfer price to lower overall profitability.
You might also like to view...
When using the graphical method, only one of the four quadrants of an xy-axis needs to be drawn
Indicate whether this statement is true or false.
The majority of litigation occurs in the:
a. state courts b. federal courts c. representative courts d. county courts e. none of the other choices are correct
What is parallel implementation?
A. Using both the old and new systems until it is evident that the new system performs correctly. B. Discarding the old system completely and immediately start to use the new system. C. Having only a small group of people use the new system until it is evident that the new system performs correctly and then adding the remaining people to the new system. D. Implementing the new system in phases until it is evident that the new system performs correctly and then implementing the remaining phases of the new system.
Conundrum Mining is expected to generate the above free cash flows over the next four years, after which they are expected to grow at a rate of 5% per year
If the weighted average cost of capital is 11% and Conundrum has cash of $85 million, debt of $65 million, and 30 million shares outstanding, what is Conundrum's expected current share price? A) $12.61 B) $16.40 C) $20.18 D) $20.81