A Transfer Price Based on the Full Cost Plus a Markup

question 134

Multiple Choice

A transfer price based on the full cost plus a markup may lead to suboptimal decisions because ________.

• A) it leads the buying division to regard the fixed costs and the markup of the selling division as a variable cost
• B) it leads the buying division to regard the variable costs and the markup of the selling division as a fixed cost
• C) it leads the buying division to regard the fixed costs and the markup of the selling division as total costs
• D) it leads the buying division to regard the variable costs and the markup of the selling division as total costs

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Definitions:

Menstruation

A monthly process in which the lining of the uterus is shed through the vagina if fertilization has not occurred.

Almond-shaped

Refers to something that resembles the shape of an almond, often used to describe certain body parts, like the amygdala in the brain.

Fimbriae

Thin, hair-like projections from the surface of a cell, organism or structure, often found in bacteria to aid in attachment to surfaces and in the female reproductive system to help move the ovum.

GTT

An acronym for glucose tolerance test, a test to measure the body's ability to metabolize glucose.