Which of the Following Is the Most Significant Disadvantage of a Cost-Based

question 100

Multiple Choice

Which of the following is the most significant disadvantage of a cost-based transfer price? (CIA adapted)

• A) Requires internally developed information.
• B) Imposes market effects on company operations.
• C) Requires externally developed information.
• D) May not promote long-term efficiencies.

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Definitions:

General Affect

General affect pertains to the overall mood or emotional tone an individual typically exhibits.

Facial Expressions

Visible changes in the face that communicate emotional states or reactions to others.

Two-Factor Theory

A psychological theory proposing that emotional experiences arise from a combination of a state of physiological arousal and a cognitive interpretation of the situation.

Four-factor Model

A framework in financial economics used to describe the returns of a portfolio or asset in relation to four factors, including market risk and three other factors that influence returns.