-Refer to Exhibit 6-1 for the Probability Distribution for Four

question 22

Multiple Choice

$\begin{array} { c c } \hline \text { Age } & \text { Probability } \\\hline \text { 30 years } & 1 / 4 \\\text { 40years } & 1 / 4 \\\text { 50 years } & 1 / 4 \\\text { 60years } & 1 / 4 \\\hline\end{array}$
-Refer to Exhibit 6-1 for the probability distribution for four different ages that are spread equally throughout a hypothetical population. What is the expected age of the next person to walk into the classroom?

• A) 45 years
• B) 35 years
• C) 55 years

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Definitions:

Transfer Price Approach

A method used for pricing transactions between affiliated companies or divisions within the same larger corporate entity.

Standard Cost Approach

A costing method that assigns a fixed cost to inventory and cost of goods sold, based on standard estimates of input costs.

Market Price Approach

An approach to transfer pricing that uses the price at which the product or service transferred could be sold to outside buyers as the transfer price.

Decentralization

The distribution of decision-making power and assignment of management and operational duties away from a central authoritative location or group.