Assuming a company uses a cost-based pricing system for transfer pricing, which of the following is not a possible definition of cost?
A) Variable cost
B) Full cost
C) Actual cost
D) Fixed cost

Question

Quizplus · Accepted Answer

Fixed cost is not typically used alone as a basis for transfer pricing because it does not reflect the incremental cost of producing an additional unit. Transfer pricing usually considers variable or full costs to ensure that the price reflects the cost of production.

Assuming a Company Uses a Cost-Based Pricing System for Transfer