All of the Following Are True of Cost-Based Transfer Prices

question 146

Multiple Choice

All of the following are true of cost-based transfer prices except:

• A) They generally promote optimal decision-making from the standpoint of the organization as a whole.
• B) They may be based either on actual costs or standard (i.e., budgeted) costs.
• C) Their use may not provide proper motivation for cost control on the part of the producing division.
• D) They may not provide proper guidance when opportunity costs exist.
• E) Generally speaking, such cost data are readily available.

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Definitions:

Pilot Conversion

A method of system implementation where a new system is initially deployed to a limited area of the organization to test its functionality before a full roll-out.

Agile Development

A methodology in software development that emphasizes flexibility, customer involvement, and the regular reassessment of goals and methods throughout the project lifecycle.

Software

Programs and other operating information used by a computer to perform specific tasks.

Upper CASE Tools

Tools that are used to automate the early stages of the SDLC (systems investigation, analysis, and design).