Full-cost transfer prices are adequate and lead to goal congruence for decisions that require knowledge of short-run variable costs.

Question

Quizplus · Accepted Answer

Full-cost transfer prices include both fixed and variable costs, which may not be relevant to some short-run decisions. Therefore, using full-cost transfer prices may not lead to goal congruence for decisions that only require knowledge of short-run variable costs.

Full-Cost Transfer Prices Are Adequate and Lead to Goal Congruence