Development of a Transfer Price Involves

question 26

Multiple Choice

Development of a transfer price involves

• A)the use of the highest external market price so that the transferring division is very profitable.
• B)determination of an appropriate profit markup.
• C)computation of the selling and delivery costs of the item being transferred.
• D)the use of a team of lawyers representing the outside interests of the company.

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Definitions:

Workers

Individuals engaged in physical or intellectual labor to produce goods and services in exchange for wages.

Production Function

A mathematical model that describes the relationship between the inputs used in production and the output of goods or services.

Technically Efficient

A condition where a firm or economy utilizes the least amount of input resources to produce a given level of output.

Lowest Cost

Refers to the scenario where a good or service is produced and delivered at the minimum possible expense.