The costs used in cost-based transfer prices:
A)are budgeted costs.
B)are actual costs.
C)can either be actual or budgeted costs.
D)are lower than the market-based transfer prices.

Question

Quizplus · Accepted Answer

The costs used in cost-based transfer prices can either be actual or budgeted costs. This allows for flexibility in determining the transfer price based on the cost structure of the transferring division. It is not necessary that the cost-based transfer prices will always be lower than market-based transfer prices as it depends on the actual cost structure and the market trends.

The Costs Used in Cost-Based Transfer Prices