Standard costs rather than actual costs should be used in transfer-pricing methods because:
A. standard costs facilitate a professionally negotiated, amicable settlement between the buying and selling divisions.
B. tax rules require the use of standard costs.
C. financial accounting rules (GAAP) require the use of standard costs.
D. standard costs are more readily available than actual costs.
E. inefficient producing divisions could pass on their inefficiencies to buying divisions in the transfer price.
Answer: E
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