The markup percentage on full cost to arrive at the target ( exisitng ) selling price is 15 . ( TCO 8 ) Transfer prices should be judged by whether they promote : ( Points : 5 ) 16 . ( TCO 8 ) Division A sells soybean paste internally to Division B , which in turn , produces soybean burgers that sell for $ 5 per pound . Division A incurs costs of $ 0.75 per pound while Division B incurs additional costs of $ 2.50 per pound . Which of the following formulas correctly reflects the company ' s operating income per pound ? ( Points : 5 ) 17 . ( TCO 8 ) When companies do not want to use market prices or find it too costly , they typically use ________ prices , even though suboptimal decisions may occur . ( Points : 5 ) 18 . ( TCO 9 ) To guide cost allocation decisions , the benefits-received criterion : ( Points : 5 ) 19 . ( TCO 9 ) The Hassan Corporation has an Electric Mixer Division and an Electric Lamp Division . Of a $ 20,000,000 bond issuance , the Electric Mixer Division used $ 14,000,000 and the Electric Lamp Division used $ 6,000,000 for expansion . Interest costs on the bond totaled $ 1,500,000 for the year . What amount of interest costs should be allocated to the Electric Mixer Division ? ( Points : 5 )
20 . ( TCO 10 ) The net present value method focuses on : ( Points : 5 ) 21 . ( TCO 10 ) The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $ 950,000 . The investment is expected to generate $ 350,000 in annual cash flows for a period of four years . The required rate of return is 14 %. The old machine can be sold for $ 50,000 . The machine is expected to have zero value at the end of the four-year period . What is the net present value of the investment ? Would the company want to purchase the new machine ? Income taxes are not considered . ( Points : 5 ) 22 . ( TCO 11 ) The four cost categories in a cost of quality program are ( Points : 5 ) 23 . ( TCO 11 ) Regal Products has a budget of $ 900,000 in 20X6 for prevention costs . If it decides to automate a portion of its prevention activities , it will save $ 60,000 in variable costs . The new method will require $ 18,000 in training costs and $ 120,000 in annual equipment