Which of the Following Transfer-Pricing Methods Can Lead to Dysfunctional

question 56

Multiple Choice

Which of the following transfer-pricing methods can lead to dysfunctional decision-making behaviour by managers?

• A)Variable cost.
• B)Full cost.
• C)External market price.
• D)A professionally negotiated, amicable settlement between the buying and selling divisions.
• E)Cost plus markup.

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Definitions:

MC Curves

Marginal Cost Curves, which graphically represent the change in the cost of producing one more unit of a good.

ATC Curves

Stands for Average Total Cost curves, which represent the average total cost per unit of output at different levels of production in economics.

Efficient Scale

The level of production that minimizes average total cost, thereby optimizing the production process and resource utilization.

Market Entry

The process or strategy employed by a company to start selling its products or services in a particular market.