Which transfer price approach is used when the transfer price is set at the amount sold to outside buyers?
A) market price
B) cost price
C) negotiated price
D) variable price

Question

Quizplus · Accepted Answer

When the transfer price is set at the amount sold to outside buyers, it means that the price is based on the market price, which is determined by supply and demand in the open market. This allows for a fair and objective determination of the transfer price, as it is based on what the product or service would fetch in the open market. This approach is seen as the most reasonable and equitable transfer pricing method.

Which Transfer Price Approach Is Used When the Transfer Price