Because the Full-Cost Method of Transfer Pricing Includes Fixed Cost

question 44

Multiple Choice

Because the full-cost method of transfer pricing includes fixed cost, it can:

• A) Pass strict accounting requirements for determining transfer prices.
• B) Pass current income tax requirements in the U.S. for determining transfer prices.
• C) Establish consistency across state and national borders.
• D) Violate OECD agreements.
• E) Cause sub-optimal short-term decision making.

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Definitions:

Antihistamines

Medications that block the action of histamine, a substance in the body that causes allergic symptoms like itching, sneezing, and runny nose.

Cholesteatoma

An abnormal, noncancerous skin growth in the middle ear or mastoid region, which can erode bones of the middle ear.

Otolith

Small calcium carbonate crystals in the inner ear that assist with balance and spatial orientation.

Cerumen

The medical term for earwax, a substance produced in the outer ear canal to protect and clean the ear.