Transfer Price Assignment
February 21st, 2020
3. Reardon Company provided the following information last year:
| Operating income | $52,000 |
| Gross margin | $300,000 |
| The actual cost of capital | 5% |
| Total capital employed | $300,000 |
Calculate economic value added for the Reardon Company.
- $35,000
- $37,000
- $39,000
- $41,000
1. Which of the following is affected by the transfer price?
- Cost of the buying division
- The conversion cost of the buying division
- Market prices of the product of the selling division
- Manufacturing cost of the selling division
2. If there is a competitive outside market for the transferred product, then the best transfer price is the _____.
- negotiated price
- market price
- variable cost price
- value-based price
3. The transfer price that would leave the selling division no worse off if the good were sold to an internal division than if the good were sold to an external party is known as _____.
- external transfer pricing
- minimum transfer pricing
- cost-based transfer pricing
- value-based transfer pricing.
