Given a Competitive Outside Market for Identical Intermediate Goods, What

question 78

Multiple Choice

Given a competitive outside market for identical intermediate goods, what is generally considered the best transfer price, assuming all relevant information is readily available?

• A) Average cost of production.
• B) Average cost of production, plus average production department allocated profit.
• C) Market price of the intermediate goods.
• D) Market price of the intermediate goods, less average production department allocated profit.
• E) Full cost, plus a mark-up for profit.

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Definitions:

Cashier's Check

A check issued by a bank, drawing on its own funds rather than on the account of a private individual, offering a secure means of payment.

Checking Account

A bank account that allows the holder to withdraw funds using checks or a debit card, typically used for daily transactions.

Deposit

A sum of money placed into an account or given as a security for the future payment of a service.

Certified Check

A check validated by a bank where the bank guarantees the availability of the funds behind the check.