Transfer prices based upon variable costs are very useful for performance evaluations because such prices will always result in profit for the selling division.

Name: Transfer prices based upon variable costs are very useful for performance evaluations because such prices will always result in profit for the selling division.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Transfer prices based on variable costs do not guarantee a profit for the selling division because they do not cover the fixed costs that the division may incur.

Transfer Prices Based Upon Variable Costs Are Very Useful for Performance