All of the following are correct statements about the cost-based transfer price approach except that it
A) can understate the actual contribution to profit by the selling division.
B) can reduce a division manager's control over the division's performance.
C) bases the transfer price on standard cost instead of actual cost.
D) provides incentive for the selling division to control costs.

Question

Quizplus · Accepted Answer

The cost-based transfer price approach does not provide an incentive for the selling division to control costs, as it is based on costs rather than market conditions or performance metrics.

All of the Following Are Correct Statements About the Cost-Based