A Limitation of Transfer Prices Based on Actual Cost Is

question 84

Multiple Choice

A limitation of transfer prices based on actual cost is that they: (CIA adapted)

• A) charge inefficiencies to the department that is transferring the goods.
• B) charge inefficiencies to the department that is receiving the goods.
• C) must be adjusted by some markup.
• D) lack clarity and administrative convenience.

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Definitions:

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The practice of giving unfair preferential treatment to one person or group at the expense of others.

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The degree to which a person has the right to ask others to do things that are considered within the scope of their authority.

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The structured order of authority and responsibility within a family, often based on age, gender, or social roles.