1 .		Stock price would be an example of a management control found at the [Hint]   total-organization level.   customer/market level.   individual-facility level.   individual-activity level.
2 .		An example of an item that would be controlled at an individual-facility level would be [Hint]   net income.   customer satisfaction.   return on investment.   absenteeism rates.
3 .		A benefit of decentralization is [Hint]   suboptimal decision making.   duplication of efforts.   increased management motivation.   focus on the firm as a whole.
4 .		The amount that one subunit charges another subunit is known as [Hint]   decentralization.   transfer price.   autonomy.   profit center.
5 .		When management chooses to charge another subunit the external price that the subunit charges to outside customers this type of transfer pricing has been selected. [Hint]   Market-based transfer pricing   Cost-based transfer pricing   Negotiated transfer pricing   Variable cost transfer pricing
6 .		Grindstead Mills has two divisions. The Transporting division has a long-term contract with Farmer Ellis to purchase wheat for $5 per bushel. Transporting incurs variable costs of $1 per bushel in transporting the wheat, and has total fixed costs of $25,000 per year. Transporting has a capacity of 50,000 bushels per year. Currently Grinding is the only customer that Transporting services. Grinding takes wheat and converts a bushel of wheat into 40 pounds of flour, which is sacked (in 40 pound bags)and sold to a bakery. Grinding has fixed costs of $75,000 per year. The variable costs of processing a bushel of wheat into flour is $5. Grinding has a capacity to produce a maximum of 2,500,000 pounds of flour a year. Grinding can buy wheat from an outside vendor for $7.50 per bushel and it sells the flour for $.40 per pound. Last year, Grinding processed 1,750,000 pounds of flour and plans to increase that to 2,000,000 for the current year. If Transporting wishes to sell at market-based price, what will be the transfer price per bushel it will offer to Grinding? [Hint]   $5.00   $6.00   $6.50   $7.50
7 .		Grindstead Mills has two divisions. The Transporting division has a long-term contract with Farmer Ellis to purchase wheat for $5 per bushel. Transporting incurs variable costs of $1 per bushel in transporting the wheat, and has total fixed costs of $25,000 per year. Transporting has a capacity of 50,000 bushels per year. Currently Grinding is the only customer that Transporting services. Grinding takes wheat and converts a bushel of wheat into 40 pounds of flour, which is sacked (in 40 pound bags)and sold to a bakery. Grinding has fixed costs of $75,000 per year. The variable costs of processing a bushel of wheat into flour is $5. Grinding has a capacity to produce a maximum of 2,500,000 pounds of flour a year. Grinding can buy wheat from an outside vendor for $7.50 per bushel and it sells the flour for $.40 per pound. Last year, Grinding processed 1,750,000 pounds of flour and plans to increase that to 2,000,000 for the current year, and currently plans to purchase as much wheat from Transporting as possible if the price is right. If Grindstead Mills uses cost-based transfer pricing at 120% of cost, what is the cost that Transporting department will offer as the transfer price? [Hint]   $5.00   $6.00   $6.50   $7.80
8 .		Grindstead Mills has two divisions. The Transporting division has a long-term contract with Farmer Ellis to purchase wheat for $5 per bushel. Transporting incurs variable costs of $1 per bushel in transporting the wheat, and has total fixed costs of $25,000 per year. Transporting has a capacity of 50,000 bushels per year. Currently Grinding is the only customer that Transporting services. Grinding takes wheat and converts a bushel of wheat into 40 pounds of flour, which is sacked (in 40 pound bags)and sold to a bakery. Grinding has fixed costs of $75,000 per year. The variable costs of processing a bushel of wheat into flour is $5. Grinding has a capacity to produce a maximum of 2,500,000 pounds of flour a year. Grinding can buy wheat from an outside vendor for $7.50 per bushel and it sells the flour for $.40 per pound. Last year, Grinding processed 1,750,000 pounds of flour and plans to increase that to 2,000,000 for the current year, and currently plans to purchase as much wheat from Transporting as possible if the price is right. Grindstead likes to see a return from the division of 20%. Both the Transporting and Grinding divisions of Grindstead are treated as profit centers. What is the maximum transfer price that Grinding is willing to pay Transporting? [Hint]   $6.00   $6.50   $7.50   $7.80
9 .		Grindstead Mills has two divisions. The Transporting division has a long-term contract with Farmer Ellis to purchase wheat for $5 per bushel. Transporting incurs variable costs of $1 per bushel in transporting the wheat, and has total fixed costs of $25,000 per year. Transporting has a capacity of 50,000 bushels per year. Currently Grinding is the only customer that Transporting services, but they could service others if they so desired. Grinding takes wheat and converts a bushel of wheat into 40 pounds of flour, which is sacked (in 40 pound bags)and sold to a bakery. Grinding has fixed costs of $75,000 per year. The variable costs of processing a bushel of wheat into flour is $5. Grinding has a capacity to produce a maximum of 2,500,000 pounds of flour a year. Grinding can buy wheat from an outside vendor for $7.50 per bushel and it sells the flour for $.40 per pound. Last year, Grinding processed 1,750,000 pounds of flour and plans to increase that to 2,000,000 for the current year. Management for Grindstead likes to see a 20% return from the division. In a perfectly competitive market, what price would Transporting require Grinding to pay them in order to get Transporting to sell to them? [Hint]   $5.00   $6.50   $7.50   $7.80
10 .		A minimum transfer price per unit should be determined by using [Hint]   variable product cost only.   incremental cost + desired profit.   incremental cost + opportunity cost.   full product cost.