The general principle on setting transfer prices that are in the organization's best interests is:
A) outlay cost plus opportunity cost of the resource at the point of transfer.
B) only variable costs plus opportunity cost of the resource at the point of transfer.
C) lost contribution margin less the allocated fixed costs for the selling division.
D) gross margin for the buying division plus the gross margin for the selling division.

Question

Quizplus · Accepted Answer

The general principle for setting transfer prices is to consider both the outlay cost and the opportunity cost of the resource at the point of transfer, ensuring that the price reflects the true economic value of the resource being transferred.

The General Principle on Setting Transfer Prices That Are in the Organization's