In Setting Internal Transfer Prices, the Minimum Price That the Selling

question 75

Multiple Choice

In setting internal transfer prices, the minimum price that the selling division would accept is

• A)a price that will result in a profit to the selling division.
• B)a price that will result in a profit to the purchasing division.
• C)its variable cost of the product plus opportunity costs lost by the transfer.
• D)its variable cost plus an internal profit margin.

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Definitions:

Preconventional Reasoning

The lowest level in Kohlberg’s theory. At this level, morality is often focused on reward and punishment. The two stages in preconventional reasoning are punishment and obedience orientation (stage 1) and individualism, instrumental purpose, and exchange (stage 2).

Individualism

A theory in society that prioritizes individual freedom over the control of groups or governmental authority.

Piaget's Methods

Techniques used by Jean Piaget, including naturalistic observation and clinical interviews, to study cognitive development in children.

Moral Development

The process by which individuals learn to distinguish right from wrong and to develop attitudes and behaviors that are socially acceptable.