A market-based transfer price considers the ________ when determining the price.
A)variable costs
B)sales price of goods
C)cost of the goods
D)contribution margin

Question

Quizplus · Accepted Answer

A market-based transfer price is determined by the sales price of goods in the external market. This is because the transfer price should reflect the value of the goods being transferred, which is best determined by the price at which similar goods are sold in the external market. The other options, including variable costs, cost of goods, and contribution margin, do not necessarily reflect the true value of the goods being transferred and can result in suboptimal transfer pricing decisions.

A Market-Based Transfer Price Considers the ________ When Determining the Price