When Considering Setting the Transfer Price at the Market Price

question 8

Multiple Choice

When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market

• A)It is appropriate to ignore that the market price includes a margin above marginal cost
• B)It is OK if the product on the market includes costly features your downstream division does not use
• C)Consider whether the product on the market is inexpensive because its quality is lower than you use
• D)if it is similar enough,it is justification for you producing it in-house

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Definitions:

Cathode

The negative terminal of an electric device.

Lead-acid Batteries

A type of rechargeable battery that uses lead peroxide and sponge lead, employing a sulfuric acid electrolyte.

Electrolyte

A substance that produces an electrically conducting solution when dissolved in a polar solvent, such as water, facilitating the flow of electric charge.

Sulfuric Acid

A highly corrosive compound used in many processes (H2SO4).