A General Calculation Method for Transfer Prices That Achieves Goal

question 32

Multiple Choice

A general calculation method for transfer prices that achieves goal congruence begins with the additional outlay cost per unit incurred because goods are transformed and then

• A) adds the opportunity cost per unit to the organization because of the transfer.
• B) subtracts the opportunity cost per unit to the organization because of the transfer.
• C) adds the sunk cost per unit to the organization because of the transfer.
• D) subtracts the sunk cost per unit to the organization because of the transfer.
• E) adds the sales revenue per unit to the organization because of the transfer.

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Definitions:

Discontinued Operations

Parts of a company's business that have been sold or otherwise disposed of, with their financial results reported separately from ongoing operations.

Cost of Goods Sold

The immediate expenses linked to the creation of a company's sold products, encompassing both the costs of materials and labor.

Net Sales

Total revenue from sales of goods or services, less returns, allowances for damaged goods, and discounts.

Operating Expense

Expenses incurred during normal business operations, such as rent, utilities, and payroll, excluding costs associated with the production of goods sold.