One of the Problems of Transfer Prices Comes from the Successive

question 33

Multiple Choice

One of the problems of transfer prices comes from the successive impact of the prices as the product moves downstream toward the consumer.At each step,the transfer price becomes the ______ for the next part of the company.

• A)market price
• B)total cost
• C)marginal cost
• D)negotiated price

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Definitions:

Tax

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization.

Unconsummated Transaction

A trade or deal that has been agreed upon in principle but has not been finalized or executed.

Levied

The act of imposing a tax, fee, or fine.

Surplus Created

The excess of production or supply over demand, resulting in a situation where the quantity of goods exceeds the quantity needed or demanded.