Choice Multiple Quiz
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Multiple Choice Quiz
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Choose the best answer
1
Which of the following is a strategic role of an investment SBU?
A) to motivate managers
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B) to provide the incentive for managers
C) to determine fairly the rewards earned by managers
D) All of the above.
2
Which of the following is NOT a method for developing or estimating the current market value of assets?
A) Gross Book Value.
B) Replacement Cost.
C) Liquidation Value.
D) Economic Value Added.
USE THE FOLLOWING INFORMATION TO ANSWER QUESTIONS 3 THROUGH 7:
Hickory Company had the following information pertaining to 2007:
Profit
$50,000
Sales
$500,000
Asset Turnover ratio 2 times
The desired minimum rate of return is 15 percent.
3
What is the ROI?
A) 10%
B) 5%
C) 20%
D) 15%
4
What is the return on sales?
A) 5%
B) 10%
C) 15%
D) 20%
5
What is the amount of assets?
A) $125,000
B) $250,000
C) $500,000
D) $1,000,000
6
The manager of Hickory is paid a bonus based on ROI. Would the manager invest in a project that will pay a return on investment of 18 percent?
A) Yes, because the project's ROI exceeds the desired minimum rate of return.
B) Yes, because the project's ROI is greater than the company's current ROI.
C) Yes, because the project's ROI is equal than the company's current ROI.
D) Incorrect, because the project's ROI is less than the company's current ROI.
7
What is Hickory's residual income?
A) $12,500
B) $25,000
C) $100,000
D) $75,000
8
In contrast to residual income (RI), economic value added (EVA) uses:
A) the firm's minimum rate of return instead of its cost of capital.
B) the firm's cost of capital instead of its minimum rate of return.
C) a required rate of return.
D) values determined using by conventional accounting policies.
E) only econometric measures, not accounting data.
9
The market price method satisfies a key objective of transfer pricing, namely:
A) objectivity.
B) selectivity.
C) usability.
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Multiple Choice Quiz
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D) consistency.
E) reliability.
10
Which of the following is a transfer pricing models?
A) Variable cost method.
B) Average price method.
C) Market cost method.
D) All of the above are transfer pricing models.
11
Which of the following is a key factor to consider in deciding whether to make internal transfers, and, if so, in setting the transfer price?
A) Is there an outside supplier?
B) Is the seller's variable cost less than the market price?
C) Is the selling unit operating at full capacity?
D) All of the above are key factors.
USE THE FOLLOWING INFORMATION TO ANSWER QUESTIONS 12, 13, AND 14:
Alpha Division has the following information pertaining to Product X that it currently transfers to the Beta Division.
Variable manufacturing costs
$500,000
Fixed manufacturing costs
$250,000
Units produced
25,000 units
Product X is currently selling for $50 in the marketplace.
12
What is transfer price per unit for Product X assuming that both Alpha and Beta agree to use variable product costs plus a 90 percent markup?
A) $60
B) $38
C) $42
D) $30
E) $20
13
What is transfer price per unit for Product X assuming that both Alpha and Beta agree to use full product costs plus a 40 percent markup?
A) $60
B) $38
C) $42
D) $30
E) $20
14
What is transfer price per unit for Product X assuming that both Alpha and Beta agree to use the market price?
A) $50
B) $38
C) $42
D) $30
E) $20
15
The key standard in international transfer pricing is:
A) consistency.
B) reliability.
C) arm's length.
D) open marketability.
E) translatability.
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2/28/2012 5:53 PM