Transfer prices should equal opportunity cost.

Name: Transfer prices should equal opportunity cost.
Brand: Quizplus
Rating: 4.8 (38 reviews)

Question

Quizplus · Accepted Answer

According to economic theory, transfer prices should equal the opportunity cost of production within the respective units of a company. This ensures that resources are allocated efficiently, and helps to prevent distortions in the market. Therefore, transfer prices that are equal to the opportunity cost of production are seen as fair and reasonable.

Transfer Prices Should Equal Opportunity Cost