Answer the following statements true (T) or false (F)
1. The transfer price should be an amount between the market price and the variable cost.
2. When operating at capacity, a market-based transfer price should be used.
3. If a company allows division managers to negotiate a cost-based transfer price, it is better to use actual costs rather than standard costs. Otherwise, the selling division has no motivation to control costs.
1. TRUE
2. TRUE
3. FALSE
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