The transfer pricing method that uses either the variable cost or the full cost as the basis for setting the transfer price is the:
A) market price method.
B) cost-based method.
C) negotiation.
D) balanced scorecard methoD.
The cost-based method uses cost as a basis for setting the transfer price.

Question

Quizplus · Accepted Answer

The cost-based method uses either the variable cost or the full cost as the basis for setting the transfer price. The other options (market price method, negotiation, and balanced scorecard method) do not specifically use cost as the basis for setting transfer prices.

The Transfer Pricing Method That Uses Either the Variable Cost