The market-based transfer price approach produces a higher total contribution margin to the company than the cost-based approach.

Question

Quizplus · Accepted Answer

The market-based transfer price approach does not inherently produce a higher total contribution margin than the cost-based approach. The impact on total contribution margin depends on the specific costs, market prices, and internal efficiencies of the company.

The Market-Based Transfer Price Approach Produces a Higher Total Contribution