ACCT 349 help A Guide to career/Snaptutorial ACCT 349 help A Guide to career/Snaptutorial | Page 16

a.Allow evaluation of both divisions on a competitive basis
b.Satisfy the Video Cards Division`s profit desire by allowing
recovery of opportunity costs
c.Not motivate the Entertainment Division and will cause mediocre
performance.
d.Provide no incentive for the Video Cards Division to control or
reduce costs
e.Encourage the Entertainment Division to purchase video cards from
an external source.
5.Use the information in question 4 but assume the Entertainment
Division is able to purchase a large quantity of video cards from an
external supplier at $8.70 per unit. The Video Cards Division, having
unused capacity, agrees to lower the transfer price to $8.70 per unit.
This action will:
a.Optimize the profit goals of the Entertainment Division while
subverting the profit goals of Parkside Inc.
b.Provide no profit incentive for the Video Cards Division.
c.Subvert the profit goals of the Video Cards Division while
optimizing the profit goals of the Entertainment Division.
d.cause mediocre performance in the Video Cards Division because
opportunity costs increase
e.Optimize the overall profit goals of Parkside Inc.
6.Use the information in question 4 and assume the Plastics Division
has unused capacity and negotiates a transfer price of $5.60 per
plastic component with the Entertainment Division. This price will:
a.Cause the Plastics Division to reduce the number of commercial
plastic components it manufactures.
b.Motivate both divisions
c.Encourage the Entertainment Division to seek an external supplier
for plastic components
d.Not motivate the Plastics Division, causing mediocre performance.
e.satisfy the Plastics Division’s profit desire by allowing recovery of
opportunity costs
7.(CPA adapted) Mar Company has two decentralized divisions, X
and Y. Division X has been purchasing certain component parts from
Division Y at $75 per unit. Because Division Y plans to raise the
price to $100 per unit, Division X desires to purchase these parts from