Which of the Following Is Not a Commonly Used Approach

question 17

Multiple Choice

Which of the following is not a commonly used approach to setting transfer prices?

• A) Market price approach
• B) Revenue price approach
• C) Negotiated price approach
• D) Cost price approach

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Definitions:

Cost Per Unit

This refers to the total expense incurred to produce, store, and sell one unit of a product or service.

Materials

The raw items or components used in the production of goods.

Equivalent Unit

A measure used in cost accounting to express the amount of work done by incomplete units in terms of fully completed units.

Weighted-Average Method

An inventory costing method where the cost of goods sold and ending inventory values are based upon the average cost of all items available for sale during the period.