In analysing transfer prices,the:
A)buyer will willingly pay more than the ceiling transfer price.
B)buyer will not willingly purchase a product for less than the incremental costs incurred to manufacture the product internally.
C)buyer will not pay less than the ceiling transfer price.
D)seller will not willingly sell a product for less than the incremental costs incurred to make the product.

Question

Quizplus · Accepted Answer

The seller will not willingly sell a product for less than the incremental costs incurred to make the product because doing so would result in a loss on the sale. Incremental costs are the additional costs incurred to produce one more unit of a product, and selling for less than these costs means the seller is not covering the variable costs of production, leading to a financial loss on each unit sold.

In Analysing Transfer Prices,the