All of the Following Are True of Cost-Based Transfer Prices

question 51

Multiple Choice

All of the following are true of cost-based transfer prices EXCEPT that they:

• A)provide no incentive to the supplying division to control costs when actual costs are used.
• B)may use standard costs to help maintain operating efficiency.
• C)promote the optimal level of transactions for the overall organization.
• D)don't give proper guidance when operating capacity is constrained.

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Definitions:

Synergistic Interaction

A situation where two or more substances or actions combine to produce a total effect greater than the sum of their individual effects.

Isotopes

Variants of a particular chemical element that differ in neutron number, and consequently in nucleon number, but have the same number of protons in their atomic nuclei.

Neutrons

Subatomic particles located within the nucleus of an atom, having no electric charge and a mass slightly larger than that of protons.

Electronic Charge

A fundamental property of electrons that is responsible for electrical interactions, characterized by a negative value and measured in coulombs.