Which One of the Following Transfer Pricing Alternatives Is Based

question 130

Multiple Choice

Which one of the following transfer pricing alternatives is based on determining an appropriate markup, where the markup is based on gross profits of unrelated firms selling similar products?

• A) Wholesale-price method.
• B) Resale-price method.
• C) Net-price method.
• D) Cost-plus method.
• E) Comparable-price method.

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Definitions:

Economic Profits

The profit a firm makes after deducting both its explicit and implicit costs, reflecting the total opportunity costs of all resources used.

Yearly Return

The total gain or loss on an investment over a one-year period, expressed as a percentage of the investment's initial value.

Variable Costs

Expenditures that adjust in relation to the level of production.

Fixed Costs

Costs that do not vary with the level of output produced by a firm, such as rent, salaries, and insurance premiums.