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:

Social Security Tax

A payroll tax collected to fund the Social Security program, which provides retirement, disability, and survivorship benefits to eligible Americans.

Government Role

The involvement and responsibilities assumed by a government in regulating and guiding the economy, protecting citizens, and providing public services.

Federal Tax Revenue

The income received by the federal government from taxes imposed on individuals, corporations, and other entities, used to fund public goods and services.

Payroll Tax

Taxes imposed on employers and employees, calculated as a percentage of the salaries that employers pay to their staff.