Which of the Following Statements About Transfer Prices Is/are True

question 75

Multiple Choice

Which of the following statements about transfer prices is/are true?
i. When the producing division has excess capacity and the external market is imperfectly competitive, the general transfer-pricing rule and the external market price will be the same.
ii. If the transfer price is set at the market price, the supplying division will be indifferent to selling internally or externally.
iii. If the transfer price is set at the market price, the buying division will usually purchase goods from inside its organisation, if product specifications are met.

• A) i and ii
• B) ii and iii
• C) i and iii
• D) All of the given answers

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Definitions:

Population Mean

The average value of a population attribute.

Population Standard Error

The standard deviation of a sampling distribution, measuring the dispersion of sample means around the population mean.

Confidence Interval

A range of values, derived from the statistics of observed data, that is likely to contain the value of an unknown population parameter.

Mean

The average of a set of numbers, calculated by dividing the sum of all values by the number of values.