Questions:
A. What problems can arise when full cost plus a markup is used as a transfer price?
B.There are six categories of costs associated with inventoriable goods for sale. What are they?
C. How would the handling of transfer prices differ in a perfectly competitive market versus one in which there is unused capacity?
D. Canseco Enterprises uses 84,000 units of Part 256 in manufacturing activities over a 300-day work year. The usual lead time for the part is 6 days; occasionally, however, the lead time has gone 8 days. The company now desires to adjust its safety stock policy. The increase in safety stock size and the likely effect on stockout costs and carrying costs, respectively, would be