Indicate Whether Each Transfer Price Below Is (A)cost-Based, (B)activity-Based, (C)market-Based
Indicate whether each transfer price below is (A)cost-based, (B)activity-based, (C)market-based, (D)dual-rate, or (E)negotiated.
____ 1. Require end-of-period adjustments for accurate organizational profit reporting
____ 2. Is required by the CRA and other international government taxing authorities
____ 3. Ensures that both managers have full information about costs and market prices
____ 4. Enhances organizational planning through accurate forecasts of internal demand
____ 5. Commonly used when no external market exists
Correct Answer:
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2. C
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