The General Principle on Setting Transfer Prices That Are in the Organization's

question 57

Multiple Choice

The general principle on setting transfer prices that are in the organization's best interests is:

• A) outlay cost plus opportunity cost of the resource at the point of transfer.
• B) only variable costs plus opportunity cost of the resource at the point of transfer.
• C) lost contribution margin less the allocated fixed costs for the selling division.
• D) gross margin for the buying division plus the gross margin for the selling division.

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Definitions:

Additional Benefits

Additional benefits are perks or rewards provided in addition to the main or standard benefits, often serving to enhance the overall compensation or satisfaction of an individual.

Immediate Action

A prompt response or measure taken as soon as possible, usually in reaction to an urgent or critical situation.

Indirect Approaches

Communication or action strategies that are not straightforward but instead use suggestion, implication, or subtlety.

Organizational Culture

The shared values, beliefs, and practices that govern how people behave in an organization.