Under Which Transfer Pricing Scheme Is the Transfer Price Set

question 90

Multiple Choice

Under which transfer pricing scheme is the transfer price set equal to the selling division's actual cost of production or set equal to the cost of production if the selling division were operating at maximum efficiency?

• A) exchange autonomy
• B) mandated full cost
• C) mandated market based
• D) dual pricing

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Definitions:

Legal Positivism

The school of jurisprudence which holds that because society requires authority, a legal and authoritarian hierarchy should exist. When a law is made, therefore, obedience is expected because authority created it.

Natural Law

A school of jurisprudence that recognizes the existence of higher law, or law that is morally superior to human laws.

Stare Decisis

Latin for “standing by the decision”; a principle stating that rulings made in higher courts are binding precedent for lower courts.

Precedent

A legal principle or rule established in a previous court decision that is either binding or persuasive for a court when deciding subsequent cases with similar issues or facts.