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 $ 0.80 per pound while Division B incurs additional costs of $ 3 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 ) 17 . # TCO 8 # A benefit of using a market-based transfer price is the ( Points : 5 ) economic viability and profitability of each division can be evaluated individually . 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 ) 20 . ( TCO 10 ) An important advantage of the net-present-value method of capital budgeting over the internal rate-of-return method is ( Points : 5 ) the net present values of individual projects can be added to determine the effects of accepting a combination of projects . 21 . ( TCO 10 ) Shirt Company wants to purchase a new cutting machine for its sewing plant . The investment is expected to generate annual cash inflows of $ 500,000 . The required rate of return is 12 % and the current machine is expected to last for four years . What is the maximum dollar amount Shirt Company would be willing to spend for the machine , assuming its life is also four ……….. ( 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