1. In the minimum transfer price formula, variable cost is defined as the variable cost of: A) Units sold externally B) All units sold, both internally and externally C) Units not sold D) units sold internally

2.

Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:

Old Machine

New Machine

Price	$300,000	$600,000
Accumulated Depreciation	90,000	-0-
Remaining useful life	10 years	-0-
Useful life	-0-	10 years
Annual operating costs	$240,000	$180,600

If the old machine is replaced, it can be sold for $24,000.The net advantage (disadvantage) of replacing the old machine is: A)$(60000) B)$24000 C)$18000 D)$(6000)

3. All of the following are correct statements about the market-based approach except that it: A)produces a higher company contribution margin than the cost-based approach B)provides a fairer allocation of the company's contribution margin to each division C) ensures that each division manager is properly motivated and rewarded D)assumes that the transfer price should be based on the most objective inputs possible

4.The following data is available for Wheels 'N Spokes Repair Shop for 2013:

Repair technicians' wages	$360,000
Fringe benefits	80,000
Overhead	60,000
Total	$500,000

The desired profit margin is $40 per labor hour. The material loading charge is 40% of invoice cost. It is estimated that 5,000 labor hours will be worked in 2013.

Wheels 'N Spokes labor charge in 2013 would be:

A) $128 B) $112 C)$140 D)$100

5. In time-and-material pricing, a material loading charge covers all of the following except: A) purchasing costs B)related overhead C) desired profit margin D) All of these are covered

6. All of the following are correct statements about the target price except it: A) is determined after the company has identified its market and does research B)is determined after the company sets its desired profit amount C) is used to determine a product's target cost D) is the price the company believes would place it in the optimal position for its target audience