CIMA Exam CIMAPRO19-P02-1 Topic 3 Question 99 Discussion

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

Question #: 99
Topic #: 3

[All CIMAPRO19-P02-1 Questions]

If transfer prices are set at variable costs, the supplying division does not cover its fixed costs.

Which of the following does NOT resolve this problem?

AEach division can be given a share of the overall contribution earned by the organization.

BA system of dual pricing can be adopted.

CReduce the level of fixed costs.

DCentral management can impose a range within which the transfer price should fall.

Show Suggested Answer

Suggested Answer: C

by Lashaunda at Sep 19, 2024, 03:58 AM

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Verona

2 months ago

I believe reducing the level of fixed costs could resolve the issue.

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Emiko

2 months ago

I agree, the supplying division needs to cover its fixed costs somehow.

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Carline

2 months ago

I think setting transfer prices at variable costs is not ideal.

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3 months ago

I think option B is the best answer here. Dual pricing can help the supplying division cover its fixed costs.

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Pearlene

2 months ago

That's true, reducing fixed costs could be another way to address the issue.

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Loreta

2 months ago

But what about option C? Reducing fixed costs could also help the supplying division.

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Kelvin

2 months ago

I agree, dual pricing can be a good solution to the problem.

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Veda

2 months ago

Option B is a good choice. Dual pricing can definitely help cover fixed costs.

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Tresa

3 months ago

Option C doesn't seem like a good solution. Reducing fixed costs doesn't really address the root issue of transfer pricing.

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Teri

2 months ago

B) A system of dual pricing can be adopted.

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Rusty

3 months ago

A) Each division can be given a share of the overall contribution earned by the organization.

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