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

question 146

Multiple Choice

All of the following are true of cost-based transfer prices except:

• A) They generally promote optimal decision-making from the standpoint of the organization as a whole.
• B) They may be based either on actual costs or standard (i.e., budgeted) costs.
• C) Their use may not provide proper motivation for cost control on the part of the producing division.
• D) They may not provide proper guidance when opportunity costs exist.
• E) Generally speaking, such cost data are readily available.

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Definitions:

U.S. Dollar

The currency of the United States, widely used globally as a standard of exchange and a reserve currency.

Merchandise Valued

The estimated worth or price of goods that are bought and sold in business transactions.

British Pound

The currency of the United Kingdom, also known formally as the pound sterling, used throughout the UK and its territories.

U.S. Dollar

The currency of the United States, widely used worldwide as a standard for financial transactions.