How can the use of transfer pricing allow a division to be evaluated as a profit center, even if it has no sales to outsiders?
When transfer prices are used, a division can be evaluated as a profit center, even if it does not sell to outsiders, because using transfer prices to value the division's output creates simulated revenues for the division. Although the operating income is not based on real sales to outsiders, it is a valuable performance measure if the transfer prices are realistic. For instance, the measures of operating income (loss) can be compared with the amount of capital the company has invested in the division to determine whether it is making an adequate return on the company's investment. The impact on the division of uncontrollable costs from the corporate office can also be assessed.
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What will be an ideal response?
Which of the following best describes a job cost record?
A) A form used to track the transfer of raw materials to the production floor B) A record that shows the raw materials balance as well as raw materials received and issued C) A document that shows direct materials, direct labor and manufacturing overhead costs for an individual job. D) A record of employee productivity and downtime for a particular job
Give two good reasons to have a business meeting and two poor reasons to have a meeting.
What will be an ideal response?
Which of the following is true about a surety's liability to pay in a surety arrangement?
A) The surety is secondarily liable for payment. B) The surety is primarily liable for payment. C) The principal debtor must be in default before the surety can be approached. D) The surety can only be approached as a last resort to the creditor.