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3 years ago

Which two methods are used most often when establishing a transfer price??

1 answer:

4 0

Cost-based transfer pricing and market-based transfer pricing are the methods that usually used in establishing a transfer price.

The cost-based pricing is used determine the price of the product by the method of calculation. It is the best way the company can maximize profit.

The market-based pricing it when the company will look for the other product with similar price and evaluate it.

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In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to c

Yakvenalex [24]

Answer:

LIFO method

Explanation:

The last-in, first-out (LIFO) inventory method values the cost of goods sold (COGS) using the price of the last purchases made by the company. This valuation method is accepted by the US GAAP and it is generally applied when the replacement costs are continuously increasing.

On the other hand, the IFRS (the international accounting standard) does not allows LIFO, it only accepts FIFO.

8 0

4 years ago

A manufacturing company is thinking about building a new factory. The factory, if built, will yield the company $300 million in

lara31 [8.8K]

Answer:

lower than 4.53%

Explanation:

To determine whether the project is viable, we will use the Internal Rate of Return (IRR). This is the rate at which the Net Present Value (NPV) becomes Nil. In other words, the point at which the discounted net cash outflows are equal to the discounted net cash inflows

In this question, there is one outflow of cash worth $220 million at the start of the project (t=0) and one inflow of $300 million in 7 years.

To calculate IRR, we will use the following formula:.

220 = [300 / ((1+r)^7)]

Solving for r, we find that the interest rate is 4.53%.

Given the cash flows, the project should be accepted at all rates below 4.53% as it will create value for the company.

6 0

4 years ago

Strand company is planning to sell 400 buckets and produce 380 buckets during march. each bucket requires 500 grams of plastic a

Alekssandra [29.7K]

Given the data in the problem, we can calculate the cost of production for each bucket:

one bucket requires:

500 grams of plastic and one-half hour of direct labor.

The plastic costs $10.00 per 500 grams and the employees are paid $15.00 per hour.

Therefore, one bucket costs (material and labor):

$10.00 + $15.00 * (1/2 hour) = $17.50 per bucket plus (1.10 * $7.50) = $25.75

for 380 buckets :

$25.75 * 380 = $9785

This value only represents the cost of production of 380 buckets for the month of March. <span />

5 0

4 years ago

Assume that Jack, Hal, and Sophia enter into a valid contract for the sale of the restaurant and for a covenant not to compete.

Iteru [2.4K]

Answer: Option (B)

Explanation:

Condition subsequent clause is referred to as an exit clause from the existing contract. This agreement in between the parties tends to include languages that loosens or frees one of individuals from the agreement or the deal. This tends to mostly occur when the conditional outcome or result takes place. The conditional subsequent relieves an individual or a party from all the obligations.

4 0

3 years ago

The gross earnings of the factory workers for Vargas Company during the month of January are $66,000. The employer’s payroll tax

SpyIntel [72]

Answer:

(a) Debited all the loses and expenses and credited all the increased liability.

Factory Labor a/c Dr. $80,000

To Factory wages payable $66,000

To Employer payroll tax payable $8,000

To Employer fringe benefits payable $6,000

(recording of factory labor costs)

(b) All increased assets and expenses and losses are debited and credited the increased liability.

Work in process Inventory a/c (85% of $80,000) Dr. $68,000

Manufacturing account a/c (15% of $80,000) Dr. $12,000

To Factory Labor $80,000

(recording of factory labor to production)

6 0

4 years ago