The Most Valid Reason for Using Something Other Than a Full-Cost-Based

question 152

Multiple Choice

The most valid reason for using something other than a full-cost-based transfer price between units of a company is because a full-cost price

• A)is typically more costly to implement.
• B)does not ensure the control of costs of a supplying unit.
• C)is not available unless market-based prices are available.
• D)does not reflect the excess capacity of the supplying unit.

---

Definitions:

Critical Thinking

The objective analysis and evaluation of an issue in order to form a judgment.

Conscientious

Referring to a trait of being thorough, careful, or vigilant; implies a desire to do a task well.

Critical Thinking

involves the objective analysis and evaluation of an issue in order to form a judgment.

Defensible

Defensible refers to something that can be supported or maintained with evidence, making it justifiable in the face of scrutiny or challenge.