A variable-costing transfer pricing system is appropriate when there is ________.
A) constrained capacity for the selling segment
B) constrained capacity for the buying segment
C) excess capacity for the selling segment
D) excess capacity for the buying segment

Question

Quizplus · Accepted Answer

A variable-costing transfer pricing system is appropriate when there is excess capacity for the selling segment because it ensures that the internal transfer of goods does not burden the selling segment with fixed costs, making internal transfers more economically viable when additional capacity is available.

A Variable-Costing Transfer Pricing System Is Appropriate When There Is