In computing a transfer price,the minimum price should be no lower than the incremental costs associated with the goods plus the opportunity cost of the facilities used.

Question

Quizplus · Accepted Answer

This statement is true as the transfer price should at least cover the cost of producing or acquiring the goods, and the opportunity cost of not selling to someone else. These costs include incremental costs such as raw materials, labor, and variable overhead, as well as fixed costs and the cost of capital of the company's facilities.

In Computing a Transfer Price,the Minimum Price Should Be No