Which of the Following Is an Advantage of Using Cost-Based

question 41

Multiple Choice

Which of the following is an advantage of using cost-based transfer prices?

• A) Such prices are an objective measure and easy to compute.
• B) Such prices motivate the buying division to control cost.
• C) Such prices provide a sense of fairness.
• D) Such prices will usually exceed the market-based or negotiated transfer prices.

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Definitions:

Cash And Carry

A policy adopted by the United States prior to entering World War II that allowed the sale of materials to belligerents, as long as they paid in cash and transported the goods themselves.

Great Britain

The island nation comprising England, Scotland, and Wales, which is part of the United Kingdom.

Pearl Harbor Attack

A surprise military strike by the Imperial Japanese Navy Air Service against the United States naval base at Pearl Harbor, Hawaii, on December 7, 1941, leading to the United States' entry into World War II.

Surprise Attack

A military tactic involving an unexpected assault on an adversary, with the intent of catching them off guard and gaining a tactical advantage.