Dual-rate transfer pricing systems are appropriate when the:
A) Selling department has excess capacity
B) Market price is higher than the variable cost
C) Market price is unknown
D) Market price is higher than the full cost

Question

Quizplus · Accepted Answer

Dual-rate transfer pricing systems are appropriate when the selling department has excess capacity because it allows the selling department to cover its variable costs and contribute to fixed costs, while the buying department benefits from a lower transfer price.

Dual-Rate Transfer Pricing Systems Are Appropriate When The