For Each of the Following Transfer Price Descriptions or Operating

question 33

Short Answer

For each of the following transfer price descriptions or operating situations, tell which of the general methods of transfer pricing it is most appropriate.
A)any method
B)negotiated
C)cost-based
D)market-based
-145% of full costs

• A)any method
• B)negotiated
• C)cost-based
• D)market-based
• -145% of full costs

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Definitions:

Gross Profit

The financial metric representing the difference between revenue and the cost of goods sold, indicating how efficiently a company is producing its goods.

Cost Flow Assumption

A method of accounting designated to assess inventory worth and calculate the cost of goods sold, which can be either FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Physical Flow of Goods

Refers to the actual movement of goods through the production process to the customer, distinct from the accounting or paper flow.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a dataset, assigning weights to each number based on its significance.