All of the Following Are Correct Statements About the Cost-Based

question 49

Multiple Choice

All of the following are correct statements about the cost-based transfer price approach except that it

• A) can understate the actual contribution to profit by the selling division.
• B) can reduce a division manager's control over the division's performance.
• C) bases the transfer price on standard cost instead of actual cost.
• D) provides incentive for the selling division to control costs.