Define cost-based transfer price. When should cost-based transfer pricing be used? Explain your answer.
What will be an ideal response?
Cost-based transfer price is a transfer price based on the cost of producing the goods. This price could be the variable cost, the full cost including the variable cost and the fixed cost, or the cost plus a markup. It is used when the division is operating below capacity. Because sales cannot be made to customers outside the company, managers can negotiate a transfer price that is satisfactory to both divisions. There is capacity available to produce goods for other divisions.
You might also like to view...
Which of the following is true when formatting messages for mobile devices?
A) Messages should contain more graphics to aid in readability. B) Messages should be short with several web links embedded in them. C) Messages should be written in a traditional format to aid in understanding. D) Messages should be based on location-aware technology. E) Messages should be formatted differently to make reading easier on mobile devices.
A brand is a shorthand descriptor of the promised value that a market offering delivers to targeted customers and a means of differentiating this value from that of other market offerings
Indicate whether the statement is true or false
A leader’s respect for others is not shown by ______.
A. listening closely to subordinates B being empathic C. being tolerant of opposing points of view D. being apathetic
Which of the following is NOT an advantage of video interviews?
a. They make better use of a recruiter's valuable time. b. They screen out applicants who cannot work under pressure. c. They allow students who may have financial constraints to meet with large companies. d. They eliminate the need for face-to-face interviews.