Using the Comparable Profits Method of Transfer Pricing,the Transfer Price

question 37

Multiple Choice

Using the comparable profits method of transfer pricing,the transfer price is determined by:

• A)backing into it based on objective measures of sales,operating expenses,and a reasonable profit margin on sales.
• B)adding a standard profit margin to the operating expenses of the buying division.
• C)dividing a reasonable amount of profit between the selling and buying divisions.
• D)comparing the normal profits of the selling and buying divisions and basing the price on the highest margin.

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Definitions:

Closed Switch

A switch that is in the "on" position, allowing electrical current to flow through the circuit.

Ladder Logic

A graphical programming language used to model and program sequential control systems in programmable logic controllers (PLCs).

Symbolic Language

Symbolic language is a system of communication using symbols or a series of symbols to represent ideas, concepts, or objects.