Optimal corporate decisions do NOT result when goods or services are transferred at:
A)market prices.
B)variable-cost prices.
C)full-cost prices.
D)Either B or C is correct.

Question

Quizplus · Accepted Answer

Optimal corporate decisions are most likely to be distorted when goods or services are transferred at either variable-cost prices or full-cost prices, rather than at market prices. Market prices are generally considered the best for internal transfers because they reflect the true opportunity cost of the goods or services. Variable-cost pricing does not include fixed costs, which can lead to suboptimal decisions about resource allocation. Full-cost pricing includes fixed costs, which might not be relevant for decision-making on the margin.

Optimal Corporate Decisions Do NOT Result When Goods or Services