Which prices are recorded by departments under a dual-rate transfer pricing system?
A) Variable cost/Variable cost
B) Variable cost/Market price
C) Market price/Full cost
D) Market price/Variable cost

Question

Which prices are recorded by departments under a dual-rate transfer pricing system? 
A) Variable cost/Variable cost 
B) Variable cost/Market price 
C) Market price/Full cost 
D) Market price/Variable cost

Quizplus · Accepted Answer

Under a dual-rate transfer pricing system, prices are recorded by departments based on market price and variable cost. Therefore, the best choice is D, which matches the two relevant cost categories. Options A and C include full cost, which is not typically used to calculate transfer prices. Option B includes market price and variable cost, but in the wrong order.

Which Prices Are Recorded by Departments Under a Dual-Rate Transfer