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:

Statutory Provisions

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Safe Harbor Provisions

Legal provisions that provide protection from liability under certain conditions, often seen in regulatory contexts.

Internal Validity

The extent to which a study can establish a causal relationship between variables, free of confounding factors.

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The extent to which the results of a study can be generalized to other situations and to other people.