All of the following are correct statements about the market-based approach EXCEPT that it
A)assumes that the transfer price should be based on the most objective inputs possible.
B)provides a fairer allocation of the company's contribution margin to each division.
C)produces a higher company contribution margin than the cost-based approach.
D)ensures that each division manager is properly motivated and rewarded.

Question

Quizplus · Accepted Answer

The market-based approach may not necessarily produce a higher company contribution margin than the cost-based approach, as it depends on the market conditions and competition. The other three statements are correct.

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