The Transfer Pricing Method That Uses Either the Variable Cost

question 99

Multiple Choice

The transfer pricing method that uses either the variable cost or the full cost as the basis for setting the transfer price is the:

• A) market price method.
• B) cost-based method.
• C) negotiation.
• D) balanced scorecard methoD.
• The cost-based method uses cost as a basis for setting the transfer price.

---

Definitions:

Interest Rate

The cost of borrowing money or the return on investment, usually expressed as a percentage.

Pure Interest Yield

The portion of a loan's interest rate that solely reflects the cost of borrowing money, excluding any other charges or fees.

Purchasing Power

The ability of an entity, such as a person or a firm, to buy goods or services, typically measured by the amount of goods or services that one unit of currency can buy.

Default Probability

The likelihood that a borrower will fail to meet the obligations of debt repayment within the stipulated terms.