The Primary Difference Between a Cost-Based Transfer Price and a Market-Based

question 26

Multiple Choice

The primary difference between a cost-based transfer price and a market-based transfer price is

• A) that the market-based price is usually lower.
• B) that the cost-based price will always be more advantageous to the company's overall profit.
• C) the appropriate profit factor.
• D) the influence of an external source for the raw material or part.

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Definitions:

Habituation

A process by which an individual becomes accustomed to a stimulus after repeated exposure, leading to a decrease in response.

Newborn

An infant who is in the initial period after birth, typically considered to be the first few weeks of life.

Mobile

The ability to move or be moved freely and easily; also refers to technology devices like smartphones that support this capability.

Truck Horn

A loud horn used on trucks for signaling, often to alert other drivers or pedestrians.