Which of the following is an advantage of using cost-based transfer prices?
A) Such prices are an objective measure and easy to compute.
B) Such prices motivate the buying division to control cost.
C) Such prices provide a sense of fairness.
D) Such prices will usually exceed the market-based or negotiated transfer prices.

Question

Quizplus · Accepted Answer

Cost-based transfer prices are considered objective and easy to compute because they are based on the actual costs incurred in producing the goods or services being transferred, making them a straightforward and transparent method for setting transfer prices within an organization.

Which of the Following Is an Advantage of Using Cost-Based