Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

CIMA Exam CIMAPRO19-P02-1 Topic 3 Question 99 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 99
Topic #: 3
[All CIMAPRO19-P02-1 Questions]

An organization has a decentralized structure in which division A supplies division B with an intermediate product for which there is no external market. Division B carries out further processing and then sells the final product on the external market. Due to organizational policy the current transfer pricing basis is variable cost.

The manager of division A has stated, "The current transfer price is unfair because it does not enable us to recoup our costs".

The manager of division B has stated, "The current transfer pricing system enables us to quote competitive prices for the finished product".

The Chief Executive of the organization is considering imposing a transfer pricing policy that uses dual pricing.

Dual pricing would:

Show Suggested Answer Hide Answer
Suggested Answer: C

by Lashaunda at Sep 19, 2024, 03:58 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRO19-P02-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel
Jaleesa
1 months ago
C is an interesting choice, but I don't think increasing divisional autonomy is the main goal here. The focus seems to be on finding a fair transfer pricing system that works for both divisions.
upvoted 0 times
Shaquana
22 days ago
A) be welcomed by the manager of division A but the manager of division B would resist it.
upvoted 0 times
...
...
Leontine
2 months ago
Haha, 'decentralized structure' and 'dual pricing' - sounds like a recipe for some serious corporate drama! I wonder if the CEO is looking to create more chaos or solve problems.
upvoted 0 times
Sanda
20 days ago
Division B manager: I think dual pricing could work for us too, we can still quote competitive prices.
upvoted 0 times
...
Elenor
1 months ago
Division A manager: Dual pricing would be welcomed by me, it's unfair to not recoup our costs.
upvoted 0 times
...
...
Catina
2 months ago
B is an interesting option, but I'm not sure both managers would welcome dual pricing. The manager of division A seems unhappy with the current system, so I suspect they would prefer D.
upvoted 0 times
...
Latonia
2 months ago
I think the correct answer is D. Dual pricing would involve a lump sum payment to division A in addition to the variable cost per unit. This seems like the best way to address the concerns of both division managers.
upvoted 0 times
...
Judy
2 months ago
But wouldn't dual pricing reduce divisional autonomy?
upvoted 0 times
...
Carlee
2 months ago
I agree with Peggie. Division A should be able to recoup their costs.
upvoted 0 times
...
Peggie
2 months ago
I think dual pricing would be fair for both divisions.
upvoted 0 times
...

Save Cancel