COST ACCOUNTING
RESPONSIBILITY ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Hybrid transfer pricing
|
|
|
Standard transfer pricing
|
|
|
Cost-based transfer pricing
|
|
|
Market-based transfer pricing
|
Detailed explanation-1: -The transfer price should be deemed to be fair by the managers of the buying and selling divisions. The selling division will receive the same amount for any internal or external sales. The buying division will pay the same for goods if they buy them internally or externally.
Detailed explanation-2: -Market-based transfer prices should be used only when market prices are available for the goods or services being transferred. However, market-based transfer prices are important because they help keep the company competitive in the market.
Detailed explanation-3: -Transfer pricing accounting occurs when goods or services are exchanged between divisions of the same company. A transfer price is based on market prices in charging another division, subsidiary, or holding company for services rendered.