A cost-based transfer price considers the cost of producing the goods when determining the price.

Question

Quizplus · Accepted Answer

A cost-based transfer price is based on the cost incurred in producing the goods. This approach considers the direct costs and indirect costs associated with the production of the goods and sets a price accordingly. This method is suitable for situations where the buyer and the seller are part of the same organization or where there is no competition in the market.

A Cost-Based Transfer Price Considers the Cost of Producing the Goods