The transfer pricing method that uses the price the company would charge external customers is the:
A)market-price method.
B)cost-based method.
C)negotiation method.
D)balanced scorecard method.

Question

Quizplus · Accepted Answer

The market-price method, also known as the comparable uncontrolled price (CUP) method, sets transfer prices based on the price external customers would pay for the same product or service. This approach helps ensure that transfer prices reflect market conditions and that transactions between related parties are conducted on an arm's-length basis.

The Transfer Pricing Method That Uses the Price the Company