CIMA Exam CIMAPRO19-P02-1 Topic 3 Question 104 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam

Question #: 104
Topic #: 3

An organization is comprised of two divisions. One of the divisions manufactures a product that it sells both to an imperfect external market and to the other division.

The organization wishes to establish the most suitable basis for the transfer price for this product and is considering either a negotiated transfer price or a market-based transfer price.

Which of the following statements is correct?

AA negotiated transfer price could help to overcome the problem of establishing a single price for this external market.

BA single market price for all of the division's output can be determined easily whereas a negotiated transfer price may result in protracted negotiations.

CA negotiated transfer price will always result in goal congruence whereas this is not always true when using a single market-based transfer price.

DA market-based transfer price will ensure both divisional autonomy and goal congruence because part of the division's output is sold to the external market.

Show Suggested Answer

Suggested Answer: A, C, D

by Hyman at Dec 05, 2024, 05:22 AM

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Kristofer

19 hours ago

A negotiated transfer price could help overcome the problem of establishing a single price for the external market. This would allow for more flexibility in pricing based on the specific needs of each division.

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Teddy

2 days ago

But wouldn't determining a single market price be easier and more efficient for the organization?

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Ronald

6 days ago

I think a negotiated transfer price could help in setting a fair price for the external market.

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