The Transfer Price That Should Be Used by Top Management

question 136

Multiple Choice

The transfer price that should be used by top management in evaluating whether a division should buy within the company or from an outside supplier is:

• A) negotiated transfer price.
• B) transfer price based on full cost.
• C) transfer price based on variable cost.
• D) transfer price based on an open market price.

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Definitions:

Stimulant

A substance that raises levels of physiological or nervous activity in the body.

Depressant

A class of drugs that reduce the functionality of the nervous system, leading to decreased arousal or stimulation in areas of the brain.

Narcotic

A class of drugs that reduce pain, induce sleep, and may alter mood or behavior; often used medicinally but can lead to dependency.

Narcotic

traditionally refers to substances that induce sleep or stupor, particularly opioids, which are also used for pain relief.