Standard Costs Rather Than Actual Costs Should Be Used in Transfer-Pricing

question 33

Multiple Choice

Standard costs rather than actual costs should be used in transfer-pricing methods because:

• A) financial accounting rules (GAAP) require the use of standard costs.
• B) tax rules require the use of standard costs.
• C) standard costs are more readily available than actual costs.
• D) standard costs facilitate a professionally negotiated, amicable settlement between the buying and selling divisions.
• E) inefficient producing divisions could pass on their inefficiencies to buying divisions in the transfer price.