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A limitation of transfer prices based on actual cost is that they
Suggested Answer: B
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The optimal transfer price of a selling division should be set at a point that will have the most desirable economic effect on the firm as a whole while at the same time continuing to motivate the management of every division to perform efficiently Setting the transfer price based on actual costs rather than standard costs would give the selling division little incentive to control costs.
13 comments · newest first
CL
Clarence
11 months ago
Wait, are we sure about B? I feel like it depends on the situation.
CL
Clorinda
12 months ago
D is a big issue, clarity is key in these transactions!
SE
Sena
12 months ago
C seems a bit off, why would you need a markup on actual costs?
AN
An
12 months ago
I think B is spot on, it can really mess up overall strategy.
VE
Vernice
1 year ago
A is definitely true, it penalizes the transferring department.
GA
Gabriele
1 year ago
I think the lack of clarity and administrative convenience could also be a limitation, but it seems less likely than the others.
TH
Thomasena
1 year ago
I feel like the answer might be related to the need for adjustments, like a markup, but I can't recall the specifics.
LA
Laurel
1 year ago
I think the limitation is about how actual costs can lead to inefficiencies being charged to the transferring department, but I'm not entirely sure.
TA
Tamar
1 year ago
I remember a practice question that discussed how actual cost transfer prices could lead to suboptimal decisions for the company. That might be the right answer here.
AL
Alease
1 year ago
This seems straightforward enough. I'll go with option B and use the RetrieveOptionSetRequest. Shouldn't be too hard to implement in the non .NET language.
RO
Roselle
1 year ago
This question seems straightforward. I think the answer is C - developing an integrated supply chain.
CO
Corazon
1 year ago
I'm kind of torn between DaemonSet and Sidecar. Sidecars seem more about enhancing existing services, right?
TR
Trina
1 year ago
I'm not entirely sure about this one. The question mentions that there might be multiple correct solutions, so I'll need to carefully consider all the options before deciding on the best approach.