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CIMAPRO19-P02-1 Exam - Topic 4 Question 45 Discussion

A group consists of two divisions, Alpha and Beta, both of which are profit centers. Alpha sells a product to the external market and also sells it as an intermediate product to Beta.Beta then processes further before selling the final product to the external market. The current group transfer pricing policy requires Alpha to charge Beta with the variable cost of production.Which of the following statements is valid?
A) A two-part tariff would provide a more effective basis for assessing divisional performance.
B) A dual pricing approach to transfer pricing would increase Beta's total profit and reduce Alpha's.
C) If Alpha has unfulfilled external demand then the transfer price should always be set at variable cost.
D) Transfer prices only affect the assessment of performance of investment centres, not of profit centres.

CIMAPRO19-P02-1 Exam - Topic 4 Question 45 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 45
Topic #: 4
[All CIMAPRO19-P02-1 Questions]

A group consists of two divisions, Alpha and Beta, both of which are profit centers. Alpha sells a product to the external market and also sells it as an intermediate product to Beta.

Beta then processes further before selling the final product to the external market. The current group transfer pricing policy requires Alpha to charge Beta with the variable cost of production.

Which of the following statements is valid?

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Suggested Answer: A

by Brandon at May 04, 2022, 08:50 AM

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Maile
10 months ago
Beta's profit should definitely be considered in pricing decisions!
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Almeta
10 months ago
Wait, are transfer prices really only for investment centres?
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Antonio
11 months ago
Variable cost pricing seems fair if there's external demand.
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Shawn
11 months ago
I disagree, dual pricing could complicate things too much.
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Kirk
11 months ago
A two-part tariff sounds interesting for performance assessment.
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Carlton
11 months ago
Okay, let's see. The question is asking what the "Reviewable Items" total includes, and the options mention different combinations of parent emails, attachments, loose files, embedded items, and related discussion thread items. I'll need to weigh each option carefully.
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Annice
11 months ago
This one seems pretty straightforward. Audit trails would be the best option to assist with host-based intrusion detection.
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Jettie
11 months ago
I've got a good feeling about this one. The maximum distance for 10OBaseTX Ethernet is 100 meters, and 802.3at PoE can handle up to 100 meters as well, so I'm going to go with option B.
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Glenn
11 months ago
Okay, I think I've got this. Based on the question, the Cortex XDR Pro per Endpoint license is the one that provides the EDR data collection capabilities the customer needs.
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