Use the following information to answer the following Questions
Genesis Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle Division produces containers that can be used by the Cologne Division. The Bottle Division's variable manufacturing cost is $2, shipping cost is $0.10, and the external sales price is $3. No shipping costs are incurred on sales to the Cologne Division, and the Cologne Division can purchase similar containers in the external market for $2.60.
-Transfer prices can be based on:
A) variable cost.
B) full cost.
C) an external market price.
D) a negotiated settlement between the buying and selling divisions.
E) All of the answers are correct.

Question

Quizplus · Accepted Answer

Transfer prices can be based on variable cost, full cost, external market price, or a negotiated settlement between the buying and selling divisions. These are all common methods used to set transfer prices within companies.

Use the Following Information to Answer the Following Questions