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Cost Accounting 101 Practice Test: Management Control Systems, Transfer Pricing, and Multinational Operations
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A management control system (MCS) is a framework that helps organizations compare their actual outcomes to their goals and objectives. MCSs can be formal or informal, and they gather and use information to evaluate the performance of different organizational resources. MCSs are used by businesses to understand how successfully they achieve goals related to productivity, profitability, or efficiency.  Transfer pricing is an accounting and taxation practice that allows for pricing transactions internally within businesses and between subsidiaries that operate under common control or ownership.... Show more
Cost Accounting 101 Practice Test: Management Control Systems, Transfer Pricing, and Multinational Operations
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25 Questions

1. Management control systems motivate managers and other employees to exert effort through a variety of rewards tied to the achievement of goals.
2. Transferring products or services at market prices generally leads to optimal decisions when:
3. All of the following are benefits of decentralization EXCEPT that it:
4. Tax considerations should play no part in determining a transfer price between international divisions of a firm.
5. One major advantage of negotiated transfer pricing is that it can be done with little time or effort.
6. A benefit of decentralization is that it creates better responsiveness to local needs.
7. If a computer manufacturer used its common stock price as a Balanced Scorecard control measure, it would represent the ________ perspective.
8. Goal congruence exists when individuals work toward achieving one goal, and groups work toward achieving a different goal.
9. It is possible to increase the overall after-tax profit of a multinational corporation by adjusting transfer prices.
10. Which of the following transfer-pricing methods always achieves goal congruence?
11. What is the term used to describe the situation when a manager's decision, which benefits one subunit, is more than offset by the costs to the organization as a whole?
12. In analyzing transfer prices, the:
13. A(n) ________ is a binding agreement between a multinational and the United States Internal Revenue Service to obtain approval for a specific transfer price for a number of years.
14. The goal of a management control system is to improve the collective decisions in an organization in an economically feasible way.
15. Optimal corporate decisions do NOT result when goods or services are transferred at:
16. Exertion towards a goal is:
17. The benefits of a decentralized organization are greater when a company:
18. Which of the following transfer-pricing methods preserves sub-unit autonomy?
19. Number of processes with real time feedback would be an example of a Balanced Scorecard control measure from a customer perspective.
20. Opportunity costs represent the cash flows directly associated with the production and transfer of the products and services.
21. Section 482 of the U.S. Internal Revenue Code governing the taxation of multinational transfer pricing recognizes that transfer prices can be:
22. Cost-based transfer prices are helpful when:
23. A well-designed management control system obtains all of its information from within the company.
24. Effort in terms of management control systems is defined in terms of physical exertion such as a worker producing at a faster rate.
25. Management control systems reflect only financial data.

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