Why is "standard cost" a better measure for a transfer price than "actual cost"?
When a transfer is based on actual cost, the producing division has no incentive to be efficient in its production. With a standard costing system, any differences between standard and actual costs will be the responsibility of the producing division. Hence, the producing division has incentive to be efficient.
You might also like to view...
How did Franklin Roosevelt’s establishment of the minimum wage fit with Adam Smith’s economic philosophy?
a. It satisfied Smith’s argument for a livable wage for every full-time worker. b. It violated Smith’s argument for government nonintervention in the economy. c. It violated Smith’s argument that businesses should obey the law and seek profits and nothing else. d. It satisfied Smith’s argument that governments should seek to regulate businesses to force ethical behavior in all ways possible.
The point where the total costs line intersects the left-hand vertical axis on the cost-volume-profit chart represents:
A) the minimum possible operating loss B) the maximum possible operating income C) the total fixed costs D) the break-even point
According to your text, what is the biggest mistake marketers make when evaluating the success of their CSR programs?
A. including all significant stakeholder groups in the auditing process B. not evaluating the CSR program because of the financial impact it will have on the firm C. not including all significant stakeholder groups in the auditing process D. using both quantitative and qualitative measurements E. failing to evaluate the financial impact the auditing process will have on the firm
Small neighborhood florists, shoe stores, and ethnic food markets are most likely to be:
A. supercenters B. franchise outlets C. membership clubs D. chain stores E. independent retailers