Market-based transfer prices are ideal when there is no idle capacity.in the selling division.

Question

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Market-based transfer prices are based on the market price of comparable goods or services sold by other companies in the market. This means that the transfer price reflects the current supply and demand conditions for the product or service. When there is no idle capacity in the selling division, market-based transfer prices are ideal because they ensure that the selling division receives a fair price for its product or service, while also ensuring that the buying division pays a reasonable price.

Market-Based Transfer Prices Are Ideal When There Is No Idle