1) Which of the following describes the goal that should be pursued when setting transfer prices? Maximize profits of the buying division. Maximize profits of the selling division. Allow top management to become actively involved when calculating the proper dollar amounts. Establish incentives for autonomous division managers to make decisions that are in the overall organization's best interests (i.e., goal congruence). Minimize opportunity costs.
2) The amounts charged for goods and services exchanged between two divisions are known as:
a. opportunity costs. transfer prices. standard variable costs. residual prices. target prices.
3) Which of the following is an appropriate base to distribute the cost of building depreciation to responsibility centers?
a. Number of employees in the responsibility centers. Budgeted sales dollars of the responsibility centers. Square feet occupied by the responsibility centers. Budgeted net income of the responsibility centers. Total budgeted direct operating costs of the responsibility centers
4) Which of the following bodies oversees audits and auditors, and sanctions firms and individuals for violations of laws and regulations? American Institute of Certified Public Accountants (AICPA). American Accounting Association (AAA). Public Company Accounting Oversight Board (PCAOB). Financial Accounting Standards Board (FASB). Accounting Principles Board (APB).
5) Sunrise Corporation has a return on investment of 15%. A Sunrise division, which currently has a 13% ROI and $750,000 of residual income, is contemplating a massive new investment that will (1) reduce divisional ROI and (2) produce $120,000
