All of the following are possible transfer pricing methods used in practice except:
A) Market price.
B) Variable cost.
C) Fixed cost.
D) Full cost.
E) Negotiated price.

Question

Quizplus · Accepted Answer

All of the other options are possible transfer pricing methods used in practice. Market price involves setting a transfer price based on the prevailing market price for similar goods or services. Variable cost involves setting a transfer price equal to the variable costs associated with producing the goods or services being transferred. Full cost involves setting a transfer price equal to the full cost of producing the goods or services, including direct and indirect costs. Negotiated price involves setting a transfer price through negotiation between the buying and selling divisions. However, fixed cost is not a typical transfer pricing method as it does not take into account the variable costs or market prices associated with the goods or services being transferred.

All of the Following Are Possible Transfer Pricing Methods Used