What Is the Primary Difficulty of Using Market-Based Transfer Prices

question 16

Multiple Choice

What is the primary difficulty of using market-based transfer prices for intercompany transactions?

• A)markets that are too complex
• B)lack of a well-developed market
• C)lack of objectivity
• D)operating inefficiencies are transferred from one subsidiary to another

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Definitions:

Medicare Tax

A federal tax that funds Medicare, a healthcare program for individuals over 65 and some younger people with disabilities; deducted from employee wages with a matching amount paid by employers.

Time And A Half

The payment rate typically used for overtime work, equal to one and a half times the regular hourly wage.

Notes Payable

Short-term or long-term liabilities recorded when a business borrows money or purchases goods or services on credit with a formal written promise to pay.

Calendar-Year Company

A company that operates its fiscal year in alignment with the calendar year, beginning January 1st and ending December 31st.