Which of the Following Is an Advantage of Cost-Based Transfer $\quad$

question 35

Multiple Choice

Which of the following is an advantage of cost-based transfer prices?
I $\quad$ Managers do not have much incentive to reduce fixed costs
II $\quad$ Managers may be motivated to purchase goods and services from outside the company
IV $\quad$ Contribution margins may be split between buying and selling divisions

• A) I only
• B) II only
• C) III only
• D) None of the above (I, II, and III are all disadvantages)

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Definitions:

Multinational Chain

A company that owns and operates facilities in multiple countries across the globe.

Brick And Mortar

Brick and Mortar refers to businesses that have physical premises for customers to visit as opposed to operating solely online.

Market Segmentation

The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors who might require separate products or marketing mixes.