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Transfer Pricing Chapter Outline A.<Tab/>Cost Management Challenges - Chapter 19 provides four cost management challenges. 1.<Tab/>What is the primary purpose of establishing a transfer price policy? 2.<Tab/>What are four methods for setting transfer prices? 3.<Tab/>What is the significance of excess capacity in the transferring division, and what impact does that have on the transfer price? 4.&…

…the above. <Tab/>Answer: d<Tab/><Tab/>Learning Objective: 4 11.<Tab/>US division's profit after tax using variable costs for transfer pricing amounts to a.<Tab/>$39,200 b.<Tab/>$-39,200 c.<Tab/>$53,550 d.<Tab/>$-53,550 e.<Tab/>None of the above.