P2 Exam Dumps : Advanced Management Accounting

It is worthwhile for a company to sell further units when the marginal revenue is greater than the marginal cost.

Price is the only factor affecting the demand for products and services.

Premium pricing is possible when there is a measure of product or service differentiation.

Loss leadership pricing is appropriate for a new product which is not part of a range of products.

Demand functions can be predicted accurately and the relationship between price and quantity demanded is always constant.

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

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

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

A 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.