Asked by Kelsey Moses on Jul 28, 2024
Verified
What is the general rule for setting a transfer price?
A) Additional costs of the supplying division + opportunity cost to the buying division
B) Additional costs of the supplying division + opportunity cost to the supplying division
C) Additional costs of the buying division + opportunity cost to the supplying division
D) Always set at full-cost-plus price
Opportunity Cost
Forgoing the potential gains from various choices by settling on one option.
Supplying Division
The unit or segment within a larger organization responsible for providing materials, products, or services to another division or department.
Transfer Price
The price charged for goods and services transferred between departments or divisions of the same company or between related entities.
- Identify and evaluate the factors influencing the setting of transfer prices.
Verified Answer
Learning Objectives
- Identify and evaluate the factors influencing the setting of transfer prices.
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