When using transfer prices based on costs rather than market prices, management can better determine profitability of the investment made in the intermediate producing division.

Name: When using transfer prices based on costs rather than market prices, management can better determine profitability of the investment made in the intermediate producing division.
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Question

Quizplus · Accepted Answer

A market based price is a better approach for determining the profitability of a product providing division 's investment.

When Using Transfer Prices Based on Costs Rather Than Market