If the fixed costs are relatively large,a relatively good approximation to the correct transfer price is
A)average costs
B)average fixed costs
C)average variable costs
D)the market price

Question

Quizplus · Accepted Answer

When fixed costs are large, using average variable costs as a transfer price helps ensure that the price reflects the costs that vary with production, avoiding the distortion that large fixed costs might introduce.

If the Fixed Costs Are Relatively Large,a Relatively Good Approximation